Item 4. Controls and Procedures
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer, President and General
Counsel, as our principal executive officer (“Chief Executive Officer”), and our Chief Financial Officer, as our principal
financial officer (“Chief Financial Officer”), evaluated the effectiveness of our “disclosure controls and procedures,”
as such term is defined in Rule 13a-15(e) promulgated under the Exchange Act. Disclosure controls and procedures are designed to ensure
that the information required to be disclosed in the reports that we file or submit to the Commission pursuant to the Exchange Act are
recorded, processed, summarized and reported within the period specified by the Commission’s rules and forms and are accumulated
and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required
disclosures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of July 31,
2021, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting,
below described in Management’s Report on Internal Control over Financial Reporting.
A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Also, controls can be
circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The
design of any system of controls is also based in part upon certain assumptions about the likelihood of future events. There can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal controls over financial reporting as that term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
A material weakness is a deficiency, or a combination
of deficiencies, in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement
of the company’s annual or interim financial statements will not be prevented or detected in a timely basis.
Under the supervision and with the participation
of our Chief Executive Officer and our Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal
controls over financial reporting as of July 31, 2021 based on the criteria outlined in Internal Control-Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and identified the following material weaknesses
in internal controls over financial reporting:
·
Insufficient segregation of duties of the Chief Financial Officer. We have delegated some of the duties of our Chief Financial Officer to other personnel within the Company and have added review and approval processes performed by the Chief Executive Officer. However, we have determined that we still have insufficient segregation of the duties of our Chief Financial Officer and will continue to review these procedures to determine ways to further improve them given our limited staff.
·
Insufficient information technology controls and documentation. We currently use accounting software which we have determined is inadequate to provide the level of controls required by COSO. We are in the process of initiating a review process to fully evaluate the deficiencies in our technology controls and documentation. Based upon the results of this review process, we intend to implement the required remediation measures when it is reasonable to do so.
Because of these material weaknesses, our Chief
Executive Officer and our Chief Financial Officer concluded that, as of July 31, 2021, our internal controls over financial reporting
were not effective based on the COSO criteria.
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We are in the process of investigating new procedures
and controls for fiscal year 2022. We plan to make changes to our procedures and controls that we believe are reasonably likely to strengthen
and materially affect our internal controls over financial reporting.
Prior to the remediation of these material weaknesses,
there remains risk that the processes and procedures on which we currently rely will fail to be sufficiently effective, which could result
in material misstatement of our financial position or results of operations and require a restatement. Because of the inherent limitations
in all control systems, no evaluation of controls - even where we conclude the controls are operating effectively - can provide absolute
assurance that all control issues, including instances of fraud, if any, have been detected. These inherent limitations include the realities
that judgments in decision making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can
be circumvented by the individual acts of a person, by collusion of two or more people, or by management override of the controls. The
design of any system of controls also is based in part upon certain assumptions about the likelihood of future events; accordingly, there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, our control
systems, as we develop them, may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures
may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur
and not be detected and could be material to our financial statements.
Changes in Internal Controls over Financial
Reporting
There were no changes
in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal controls over financial reporting.
The Certifications of our Principal Executive
and Principal Financial Officer required in accordance with Rule 13a-14(a) under the Exchange Act and Section 302 of the Sarbanes-Oxley
Act of 2002 (“Certifications”) are attached to this Report. The disclosures set forth in this Item 4 contain information concerning:
(i) the evaluation of our disclosure controls and procedures, and changes in internal control over financial reporting, referred to in
paragraph 4 of the Certifications; and (ii) material weaknesses in the design or operation of our internal control over financial reporting,
referred to in paragraph 5 of the Certifications. The Certifications should be read in conjunction with this Item 4 for a more complete
understanding of the matters covered by the Certifications.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
There is no material
litigation currently pending against us or any of our subsidiaries or to which any of our or our subsidiaries’ property is subject.
To our knowledge, there is no material litigation against any of our officers or directors in their capacity as such, and no such litigation
is contemplated by any governmental authorities.
Item 1A. Risk Factors.
The information called for by Item 1A is not required
for a smaller reporting company.
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.