Item 4. Controls and Procedures
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of June 30, 2021, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based upon the evaluation, our management concluded that, as of June 30, 2021, our disclosure controls and procedures were not effective at a reasonable assurance level as a result of the material weakness that existed in our internal control over financial reporting as described below, and which continued to exist as of June 30, 2021.
Notwithstanding the identified material weakness, management believes the unaudited condensed financial statements included in this Quarterly Report on Form 10-Q
fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. GAAP.
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Material Weakness in Internal Control over Financial Reporting
In connection with the audit of our financial statements as of and for the years ended December 31, 2019 and 2020, we identified a material weakness in internal control over financial reporting. The material weakness related to a lack of sufficient number of qualified personnel within our accounting function to adequately segregate duties, to perform sufficient reviews and approval of manual journal entries posted to the general ledger and to consistently execute review procedures over general ledger account reconciliations, financial statement preparation and accounting for non-routine
transactions. We have begun to undertake specific remediation actions to address the control deficiencies in our financial reporting. We have hired one full-time employee and retained experienced consultants in the accounting function, and we are recruiting for additional full-time positions. We have also initiated implementation of an accounting system that will allow certain segregation of duties to be automated. We cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.
Changes in Internal Control over Financial Reporting
Due to a transition period established by SEC rules applicable to newly public companies, our management is not required to evaluate the effectiveness of our internal control over financial reporting until after the filing of our Annual Report on Form 10-K
for the year ended December 31, 2021. As a result, this Quarterly Report on Form 10-Q
does not address whether there have been any changes in our internal control over financial reporting.
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.