Item 4. Controls and Procedures
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the Exchange Act) that are designed to reasonably ensure that information required to be disclosed in our reports under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such
information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and
procedures” in Rule 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, our management
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship
of possible controls and procedures.
At
the end of the period covered by this Quarterly Report, we conducted an evaluation (the “Evaluation”), under the supervision
and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation
of our disclosure controls and procedures. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded
that, as of December 31, 2024, the disclosure controls and procedures of our Company were not effective to ensure that the information
required to be disclosed in our Exchange Act reports was recorded, processed, summarized and reported on a timely basis due to the material
weaknesses in financial reporting as discussed below.
Material
Weaknesses and Corrective Actions
The
framework used by management in making that assessment was the criteria set forth in the document entitled “2013 Internal Control
- Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission, (“COSO”). In
connection with the audits of our financial statements for the fiscal years ended June 30, 2024 and 2023, we identified certain deficiencies
relating to our internal control over financial reporting that constitute a material weakness under standards established by the Public
Company Accounting Oversight Board (the “PCAOB”). A material weakness is a deficiency, or a combination of deficiencies,
within the meaning of PCAOB Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
7
The
following material weaknesses in our internal control over financial reporting continued to exist at December 31, 2024:
●
we
do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls
over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);
●
we
do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our limited size
and early-stage nature of operations, segregation of all conflicting duties may not always be possible and may not be economically
feasible; however, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions
should be performed by separate individuals;
●
lack
of audit committee of our board of directors; and
●
insufficient
monitoring and review controls over the financial reporting closing process, including the lack of individuals with current knowledge
of U.S. GAAP.
We
outsource certain of the functions that would normally be performed by a principal financial officer to assist us in implementing the
necessary financial controls over the financial reporting and the utilization of internal management and staff to effectuate these controls.
We
believe that these material weaknesses primarily relate, in part, to our lack of sufficient staff with appropriate training in U.S. GAAP
and SEC rules and regulations with respect to financial reporting functions, and the lack of robust accounting systems, as well as the
lack of sufficient resources to hire such staff and implement these accounting systems.
We
plan to take a number of actions in the future to correct these material weaknesses including, but not limited to, establishing an audit
committee of our board of directors comprised of at least two independent directors, adding experienced accounting and financial personnel
and retaining third-party consultants to review our internal controls and recommend improvements, subject to receiving sufficient additional
capital. If we receive sufficient capital, we hope to increase the chief financial officer’s role from part-time to full-time as
the next step in building out our accounting department. We will need to take additional measures to fully mitigate these issues, and
the measures we have taken, and expect to take, to improve our internal controls may not be sufficient to (1) address the issues identified,
(2) ensure that our internal controls are effective or (3) ensure that the identified material weakness or other material weaknesses
will not result in a material misstatement of our annual or interim financial statements. In addition, other material weaknesses may
be identified in the future. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record,
process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC
will be adversely affected. This failure could negatively affect the market price and trading liquidity of our Common Stock, cause investors
to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally
materially and adversely impact our business and financial condition.
Limitations
on Effectiveness of Controls and Procedures
In
designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes
that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must
reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of
possible controls and procedures relative to their costs.
Changes
in Internal Controls over Financial Reporting
There
were no changes in our internal controls over financial reporting that occurred during the quarter ended December 31, 2024 that have
materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
8
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.