Item 4. Controls and Procedures
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and
Procedures
Our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report.
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These controls are designed
to ensure that information required to be disclosed in the reports we file or submit pursuant to the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such
information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required
disclosure.
Based
on this evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were not effective
as of March 31, 2022, at reasonable assurance level, for the following reasons:
·
ineffective control environment and lack of qualified full-time CFO who has SEC experience to focus on our financial affairs;
·
lack of qualified and sufficient personnel, and processes to adequately and timely identify making any and all required public disclosures;
·
deficiencies in the period-end reporting process and accounting policies;
·
inadequate internal controls over the application of new accounting principles or the application of existing accounting principles to new transactions;
·
inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances, and events that could have a material impact on the company’s financial reporting process;
·
deficient revenue recognition policies;
·
inadequate internal controls with respect to inventory tracking and transactions; and
·
improper and lack of timely accounting for accruals such as prepaid expenses, accounts payable and accrued liabilities.
The Company is addressing
the ineffective controls, including through the following steps:
·
The Company added independent directors in the fourth quarter of 2021 and the first quarter of 2022.
·
The Company has additional financial resources, including funds received through a public offering and a private placement completed in the first quarter of 2022, to enable the hiring of additional personnel that will result in a separation of duties going forward.
·
The Company established an independent Audit Committee in the first quarter of 2022.
Additionally, the Board of
Directors will work with management to continuously review controls and procedures to identified deficiencies and implement remediation
within our internal controls over financial reporting and our disclosure controls and procedures.
We believe that our financial
statements presented in this report fairly present, in all material respects, our financial position, results of operations, and cash
flows for all periods presented herein.
Changes in Internal Control Over Financial
Reporting
Except as set forth above,
there were no changes in our internal control over financial reporting during the quarter ended March 31, 2022, which were identified
in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
We are not party to, and our property is not the subject of, any material
legal proceedings.
Item 1A. Risk Factors.
We are a smaller reporting
company and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
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.