Item 4. Controls and Procedures
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this Quarterly
Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management,
including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon this evaluation, the Chief Executive
Officer and Chief Financial Officer each concluded that the Company’s disclosure controls and procedures were not effective to
provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and
that such information has been accumulated and communicated to the Company’s management, including the Company’s Chief Executive
Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.
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In evaluating the effectiveness of our internal
control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control - Integrated Framework 2013. Based on this evaluation, our Chief Executive Officer and our Chief
Financial Officer determined, based upon the existence of the material weakness described below, that we did not maintain effective internal
control over financial reporting as of June 30, 2021.
● We did not design or maintain an effective
control environment commensurate with the financial reporting requirements. Specifically,
we lack a sufficient number of professionals with an appropriate level of accounting knowledge,
training and experience to appropriately analyze, record and disclose accounting matters
timely and accurately while maintaining appropriate segregation of duties. Without such professionals,
we did not design and maintain formal accounting policies, procedures and controls to achieve
complete, accurate and timely financial accounting, reporting and disclosures, including
controls over the preparation and review of account reconciliations and journal entries.
The lack of adequate
staffing levels resulted in insufficient time spent on review and approval of certain information used to prepare our financial statements
and the maintenance of effective controls to adequately monitor and review significant transactions for financial statement completeness
and accuracy. These control deficiencies, although varying in severity, contributed to the material weakness in the control environment.
If one or more material weaknesses persist or if we fail to establish and maintain effective internal control over financial reporting,
our ability to accurately report our financial results could be adversely affected.
The above material weakness
did not result in a material misstatement of our previously issued financial statements, however, it could result in a misstatement of
our account balances or disclosures that would result in a material misstatement of our annual or interim financial statements that would
not be prevented or detected.
Management is taking
steps to remediate the material weakness in our internal control over financial reporting. To address the issues, we plan to hire additional
personnel in the next few months. Specifically, management will:
● Increased the number of accounting personnel;
● Begin discussions with third party experts to assist management
in completing a comprehensive risk assessment to identify, design and implement control activities; and
● Begin reviewing and enhancing business policies, procedures and
related internal controls to standardize business processes.
We expect to complete the remediation by the
end of 2021. We expect to incur additional costs to remediate this weakness, primarily personnel costs.
Changes in Internal Control Over Financial
Reporting
There have been no changes in the Company’s
internal control over financial reporting identified in connection with the evaluation that occurred during the second quarter ended
in 2021 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.
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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.