ACRO BIOMEDICAL CO., LTD. - Quarter Report: 2023 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

Commission File Number: 000-55643

12175 Visionary Way, Suite 1160; Fishers, Indiana 46038

(Address of principal executive offices)

(317) 286-6788

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ Yes ☒ No

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 60,042,000 shares of common stock on August 14, 2023.

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our report on Form 10-K for the year ended December 31, 2022, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.

We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

Item 1. Financial Statements

ACRO BIOMEDICAL CO., LTD.

Balance Sheets

(Unaudited)

The accompanying notes are an integral part of these unaudited financial statements.

ACRO BIOMEDICAL CO., LTD.

Statements of Operations

(Unaudited)

The accompanying notes are an integral part of these unaudited financial statements.

ACRO BIOMEDICAL CO., LTD.

Statements of Changes in Stockholders’ Equity

(Unaudited)

For the Three and Six months ended June 30, 2023

 For the Three and Six months ended June 30, 2022

The accompanying notes are an integral part of these unaudited financial statements.

ACRO BIOMEDICAL CO., LTD.

Statements of Cash Flows

(Unaudited) 

The accompanying notes are an integral part of these unaudited financial statements.

ACRO BIOMEDICAL CO., LTD.

Notes to Financial Statements

June 30, 2023

(Unaudited)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Acro Biomedical Co., Ltd. (the “Company”) is a Nevada corporation incorporated on September 24, 2014 under the name Killer Waves Hawaii, Inc. On January 30, 2017, the Company’s corporate name was changed to Acro Biomedical Co., Ltd.

The Company’s business is the sale of cordyceps related products. Cordyceps is a fungus that is used in traditional Chinese medicine. During the second and third quarters of 2021, the Company engaged consultants to take the initial steps to develop and implement a research and development and marketing program. These consultants are working independently and report to the chief executive officer. As of the date of this report, the research and development efforts have not developed any products, the contracts with the consultants either expired in May 2023 or will expire in August 2023, and the Company does not expect that any new product, new marketing opportunities or revenue will result from such marketing and research and development efforts.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with Rule 8-03 of Regulation S-X. Accordingly, the unaudited interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2022 have been omitted; and these unaudited interim financial statements should be read in conjunction with the audited financial statements and the footnotes thereto for the year ended December 31, 2022 included within the Company’s annual report on Form 10-K for the year ended December 31, 2022.

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the unaudited interim financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

Revenue Recognition

We recognize revenue in accordance with Topic 606, which requires revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

Under these criteria, the Company generally recognizes revenue when its products are delivered to customers in accordance with the written sales terms.

Cash received in advance from customers is recorded as deferred revenue.

Accounts Receivable

Accounts receivable are recorded in accordance with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company does not currently have any amount recorded as an allowance for doubtful accounts. Based on management’s estimate, the Company has not deemed it necessary to reserve for doubtful accounts at this time.

Net Income (Loss) Per Share of Common Stock

The Company has adopted ASC Topic 260, “Earnings per Share” which requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive. There were no potentially dilutive shares of common stock outstanding for the three and six months ended June 30, 2023 and 2022.

NOTE 3 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company had nominal cash as of June 30, 2023, had no revenue in the first and second quarters of 2023 and incurred a loss from operations for the six months ended June 30, 2023 and has incurred losses for the past few years. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company proposes to fund operations through sales of its products and equity financing arrangements. However, because of the lack of sales and the absence of any active trading market for its common stock, its financial condition and its lack of an operating history, the Company may not be able to raise funds for capital expenditures, working capital and other cash requirements and will have to rely on advances from a minority stockholder and its officer. If the Company cannot generate revenue from its products, it may not be able to continue in its business.

NOTE 4 - RELATED PARTY TRANSACTIONS AND BALANCES

During the six months ended June 30, 2023 and 2022, a minority stockholder who is not a 5% stockholder paid expenses of $144 and $504 on behalf of the Company, respectively. During the three months ended June 30, 2023 and 2022, such minority stockholder paid expenses of $108 and $216 on behalf of the Company, respectively.

At June 30, 2023 and December 31, 2022, the Company owed $77,870 and $77,726 to the minority stockholder referred to in the preceding paragraph for non-interest-bearing advances made to or paid expenses on behalf of the Company, and are due on demand, respectively.

At June 30, 2023 and December 31, 2022, the Company owed $1,100 to its CEO for non-interest-bearing advances made to or paid expenses on behalf of the Company and are due on demand.

The Company has imputed interest at the rate of 4% on the advances made to or paid expenses on behalf of the Company in the amount of $1,577 and $420 during the six months ended June 30, 2023 and 2022, respectively and in the amount of $789 and $211 during the three months ended June 30, 2023 and 2022, respectively.

NOTE 5 - LEASES

On November 3, 2021, the Company entered into a lease agreement to rent a storage facility in Hong Kong for a two-year term at HK$17,000 (approximately $2,190) per month and paid HK$33,000 (approximately $4,230) as a security deposit.

In accordance with ASC 842, the Company recognized operating lease ROU assets and lease liabilities, which had balances as follows:

Future minimum lease payments under operating leases at June 30, 2023, were as follows:

The Company recognized total lease expenses of $13,140 and $13,140 for the six months ended June 30, 2023 and 2022, respectively and of $6,570 and $6,570 for the three months ended June 30, 2023 and 2022, respectively.

NOTE 6 – STOCKHOLDERS' EQUITY

The Company issued a total of 6,776,000 and 5,506,000 shares of common stock to consultants as stock grants pursuant to two-year consulting agreements with the consultants entered into in May 2021 and August 2021, respectively, of which 11,912,000 shares were issued pursuant to the 2020 equity incentive plan (the “Plan”) and 370,000 were issued as restricted stock grants outside of the Plan. The agreements provide for the consultants to perform services described in the contracts for the two-year period commencing May 25, 2021 and August 23, 2021. The shares were valued at $19,311,600 and $12,113,200, based on the market price of the common stock on the respective dates of the agreements, which was $2.85 and $2.20 per share, respectively, and is being amortized over the two-year period starting from the date of agreement using the straight-line method. During the six months ended June 30, 2023 and 2022, the Company recorded stock-based compensation of $7,051,550 and $7,856,200, respectively, and during the three months ended June 30, 2023 and 2022, the Company recorded stock-based compensation of $3,123,450 and $3,928,100, respectively. The Company had deferred stock compensation of $1,009,433 and $8,060,983 as of June 30, 2023 and December 31, 2022, respectively, which will be recognized over the balance of the agreements, which terminate in the third quarter of 2023.

NOTE 7 - CONCENTRATION

Revenue

During the three and six months ended June 30, 2023, the Company did not generate revenue.

During the three and six months ended June 30, 2022, all revenue was derived from one customer which was generated during the first quarter of 2022.

Purchases

During the three and six months ended June 30, 2023, the Company did not purchase inventory.

During the three and six months ended June 30, 2022, all purchases were made from one supplier.

Accounts receivable

As of June 30, 2023 and December 31, 2022, the Company has accounts receivable consisting of customer A 72% and 56% and customer B 28% and 44%, respectively.

NOTE 8 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of the issuance of these unaudited financial statements and determined that no subsequent event requires recognition or disclosure to the unaudited financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.”

Overview

Since January 30, 2017, following a change of control, we have been engaged in the business of developing and marketing nutritional products that promote wellness and a healthy lifestyle. Our business to date has involved the purchase of products from three suppliers in Taiwan and the sale of these products to four unrelated customers, two of which accounted for all of our sales in the year ended December 31, 2022 and 91.7% of sales in the year ended December 31, 2021. We did not have any sales during the six months ended June 30, 2023, second and third quarters of 2022 or the third quarter of 2021.  We sell products in bulk to companies who may use our products as ingredients in their products or sell the products they purchase from us to their own customers.

All of our sales to date have been sales of cordyceps related products except that, in the quarter ended June 30, 2018, we sold metallothionein MT-3 elizer, a product that we do not currently sell. Cordyceps is a fungus that is used in traditional Chinese medicine. Cordyceps sinensis has been described as a medicine in old Chinese medical books and Tibetan medicine. It is a rare combination of a caterpillar and a fungus and found at altitudes above 4500m in Sikkim. We may also seek to market other products which we see as complimentary to our present products; however, we have not entered into negotiations with respect to the distribution of other products, and we cannot assure you that we will be able to market any other products.

We believe that, since a major market for cordyceps products is China, our customers have significant customers in China and our business was impacted by COVID-19 and steps taken by the government of China, particularly its Zero COVID policy, which was relaxed in December 2022.  We are continuing to feel the residual effect of China’s COVID policy and the loss of business during 2020 through 2022.  Further, we also cannot assure you the political instability in Hong Kong will not affect our sales, since our customers in 2017 and 2018 were Hong Kong based customers who sold their products in the PRC and none of these customers has made purchases from us since the quarter ended December 31, 2018. We cannot assure you that these factors will not affect our ability to generate revenue in the future and, to the extent that any of these factors affect our ability to generate revenue, we may not be able to continue in business.

At present, we have no full-time employees. Our only employee is our chief executive officer who works for us on a part-time basis and does not receive compensation. We face significant risks in developing our business, including, but not limited to, our ability to raise the necessary financing either through the sale of debt or equity securities or through a loan facility, our ability to increase our customer base and supply chain, our ability to increase our gross margins, our ability to hire and retain qualified research and development, marketing and administrative personnel, our ability to develop products and to market in the United States and other western markets any products we may develop, our ability to comply with any government regulations relating to the manufacture, distribution and marketing any products we develop. We cannot assure you that we can or will develop any products or generate revenue or profits in the future.

In May and August 2021, we entered into two-year service agreements with consultants who performed research and development services as well as selling general and administrative services in connection with a proposed product – a cordyceps-infused chicken feed. The agreements with the consultant either expired in May 2023 or will expire in August 2023, and they will not be renewed.  We may consider hiring one or more of the consultants as employees, but, as of the date of this report, we have not made a decision with respect to hiring any of the consultants and we do not have the funds or the revenue stream for us to hire any of the consultants.  Our statement of operation reflects the amortization of common stock issued to consultants in connection with our proposed chicken feed product.  We issued a total of 12,282,000 shares of common stock to consultants as stock grants pursuant to agreements with the consultants in May and August 2021. The agreements provide for the consultants to perform the services described in the contracts for the two-year period commencing the date of the agreements.  The shares were valued at $31,424,800, based on the market price of the common stock on the respective dates of the agreements, and is being amortized over the two-year period of the agreement terms using the straight-line method. During each of the six months ended June 30, 2023 and 2022, we recorded stock-based compensation of $7,051,550 and $7,856,200, respectively, and had deferred stock compensation of $1,009,433 and $8,060,983 as of June 30, 2023 and December 31, 2022, respectively.  The deferred stock compensation at June 30, 2023 will be fully amortized during the third quarter of 2023.  As of June 30, 2023 and August 14, 2023, we had not developed any product as a result of the services from the consultants, and we do not anticipate that any product will be developed when the consulting agreements terminate in August 2023.  Our selling, general and administrative expenses do not include any compensation for our chief executive officer, who serves without compensation and is responsible for our purchases, sales and directing our research and development program.  As a result, the results of our operations do not reflect costs that would normally be associated with a chief executive officer who performs such functions.

We require funds for our operations. At June 30, 2023, we had $2,680 in cash, $498,500 in accounts receivables, of which $480,000 remained outstanding at August 14, 2023. The accounts receivable relate to receivables for orders placed during 2022.  Although we may seek to raise funds in the equity market, we have no agreements or understandings with respect to any funding and we can give no assurance as to the availability or terms of any such financing. Because of our financial condition, the lack of sales in the eight out of fourteen quarters from 2020 through June 30, 2023, including the six months ended June 30, 2023 as well as the third quarter of 2023 through August 14, 2023, our reliance of sales primarily of one product, along with the absence of an active market for our stock and our stock being traded on the OTC Market Group’s Pink Market and being eligible for unsolicited quotes only, and our market capitalization in relation to our financial performance, together with risk related to the COVID-19 pandemic and the political and legal situation in Hong Kong, it may be difficult for us to raise funds in the equity market, and, if we are able to raise funds our stockholders may suffer significant dilution.

To the extent that we implement our business plan, we anticipate that we will incur marketing and other expenses without any assurance that such expenses will generate any significant revenue, cash flow from operations or net income. Because of our cash position, we may use equity-based compensation for our employees and independent contractors. Because of our low cash position, we may rely on loans from stockholders or related parties, although we do not have any agreements or understandings at this time, and we may issue equity to attract employees and consultants to help us develop our business plan.

Effects of COVID-19

Since our products are purchased by customers in Taiwan and Hong Kong either as one ingredient of a product to be sold to their customers in China or for resale to their customers, our business was affected by the COVID-19 pandemic as it effects manufacturers in Taiwan and Hong Kong and their customers in China, and our business may continue to be impacted by the sales lost during the pandemic.

The World Health Organization ended the global emergency status for COVID-19 on May 5, 2023.  As restrictions that had been imposed, particularly China’s zero COVID policy, to address the pandemic have been lifted, we cannot give assurance that we will generate sales as a result of the reduction of such restrictions.  Although China as lifted COVID-19 restrictions, there continues to be a risk of the deaths and lockdowns from COVID-19.  Further, we continue to feel the effects from the loss of business during the pandemic.

Inflation and Supply Chain Disruption

After years of relatively low inflation, during the past two years, countries throughout the world, including Asia, have been subject to inflation at a rate significantly higher than in recent years.  The slowdown resulting from the COVID-19 pandemic and steps taken by governments to address the pandemic, including the recent lockdown in a number of Chinese provinces and cities, have created major supply chain disruptions.  We expect that both the inflationary pressures and supply chain disruption that affect other industries will affect us.  These factors may result in delays in receipt of products we order, and increased costs which we may not be able to pass on to consumers. Both our cost of inventory and the prices we charged increased as a result of inflation. The recent Russian invasion of Ukraine has also exacerbated the inflationary and supply chain issues.  We cannot assure you that our business will not be materially impaired by inflationary and supply chain disruption.  Since we did not make any sales or purchase any inventory during the six months ended June 30, 2023, we cannot evaluate the effects of inflation on the price at which we can sell products or the cost of our inventory.

Results of Operations

Three and Six Months Ended June 30, 2023 and 2022

For the three months ended June 30, 2023, we did not generate any revenue.  Our operating expenses were $3,194,700, of which $1,878,275 represented research and development expenses related primarily to the development of cordyceps-infused chicken feed, and $1,316,425 represented selling, general and administrative expenses, of which $1,245,175 related to services provided by our consultants and $71,250 to expenses and professional fees relating to our status as a public company. The compensation to our consultants for research and development services and selling, general and administrative services totaling $3,123,450 represented the amortization of deferred stock compensation issued to the consultants in 2021. We also incurred interest expense to a minority stockholder of $789. As a result, we had a net loss of $3,195,489 or $(0.05) per share (basic and diluted).

For the three months ended June 30, 2022, we had no revenues or cost of revenues, and we incurred operating expenses of $3,996,432, of which $3,928,100 represented stock-based compensation to consultants for research and development ($2,520,000) and marketing expenses ($1,408,100) related primarily to the development of cordyceps-infused chicken feed, and the balance was primarily expenses and professional fees relating to our status as a public company. We also incurred interest expense to a related party of $211. As a result, we had a net loss of $3,996,643 or $(0.07) per share (basic and diluted).

For the six months ended June 30, 2023, we had no revenues or cost of revenues, and we incurred operating expenses of $7,198,266, of which $4,398,275 represented research and development expenses related primarily to the development of cordyceps-infused chicken feed, $2,799,991 represented selling, general and administrative expenses, of which $2,653,275 related to services provided by our consultants and $146,716 to expenses and professional fees relating to our status as a public company. The compensation to our consultants for research and development services and selling, general and administrative services totaling $7,051,550 represented the amortization of deferred stock compensation issued to the consultants in 2021. We also incurred interest expense to a minority stockholder of $1,577. As a result, we had a net loss of $7,199,843 or $(0.12) per share (basic and diluted).

For the six months ended June 30, 2022, we had revenues of $298,500, representing the sale of cordyceps products to one customer in the first quarter, cost of revenues of $222,000, a gross profit of $76,500, operating expenses of $8,001,520, of which $7,856,200 represented stock-based compensation to consultants for research and development ($5,040,000) and marketing expenses ($2,816,200) and the balance of $145,320 was primarily expenses and professional fees relating to our status as a public company. We also incurred interest expense to a related party of $420. As a result, we had a net loss of $7,925,440 or $(0.13) per share (basic and diluted).

Because of our dependence on a few customers, one of which accounted for all of our sales since in the first quarter of 2022, our revenue in any quarter is dependent upon both the timing of orders from customers and the delivery of products from our suppliers.  We did not generate any revenue in the first and second quarter of 2023.

Liquidity and Capital Resources

The following table summarizes our changes in working capital from December 31, 2022 to June 30, 2023:

The following table summarizes our cash flows for the six months ended June 30, 2023 and 2022:

Cash used in operating activities of $3,316 for the six months ended June 30, 2023 reflected primarily our net loss of $7,199,843, increased primarily by stock-based compensation representing the amortization of deferred stock compensation of $7,051,550 and a decrease in accounts receivable of $140,000.

Cash used in operating activities of $83,645 for the six months ended June 30, 2022 reflected primarily our net loss of $7,925,440, increased primarily by stock-based compensation representing the amortization of deferred stock compensation of $7,856,200, as well as a decrease in accounts receivable of $299,500, offset by an increase in inventory of $296,000.

Cash provided by financing activities of $144 for the six months ended June 30, 2023 and $504 for the six months ended June 30, 2022 reflected advances from a minority stockholder.

Going Concern

Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We had nominal cash as of June 30, 2023, had no revenue in the first and second quarters of 2023 and incurred a loss from operations for the six months ended June 30, 2023 and has incurred losses for the past few years. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Although we propose to fund operations through sales of our products and equity financing arrangements, because of the lack of sales and the absence of any active trading market for our common stock, our financial condition and our lack of an operating history, we may not be able to raise funds for capital expenditures, working capital and other cash requirements and will have to rely on advances from a minority stockholder and our officer. If we cannot generate revenue from our products, it may not be able to continue in its business. 

Critical Accounting Policy and Estimates

Our critical accounting policies are disclosed in Note 2 of Notes to Financial Statements.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements. Our management believes that these recent pronouncements will not have a material effect on our financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

Smaller reporting companies are not required to provide the information required by this item.

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of our disclosure controls and procedures (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of June 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our chief executive officer and chief financial officer, which positions are held by the same person and who is our only employee and who does not work for us on a full-time basis. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our chief executive officer and our chief financial officer, who are the same person, concluded that, due to the inadequacy of our internal controls over financial reporting, our sole employee being our chief executive and financial officer and our limited internal audit function, our disclosure controls were not effective as of June 30, 2023, such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the president and treasurer, as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Control over Financial Reporting

As reported in our annual report on Form 10-K for the year ended December 31, 2022, management has determined that our internal controls contain material weaknesses due to the absence of segregation of duties, as well as lack of qualified accounting personnel and excessive reliance on third party consultants for accounting, financial reporting and related activities. The lack of any separation of duties, with the same person, who is our only employee who serves as both chief executive officer and chief financial officer, who is our sole director and who does not have an accounting background and serves on a part-time basis, makes it unlikely that we will be able to implement effective internal controls over financial reporting in the near future.

During the period ended June 30, 2023, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 6: Exhibits

Exhibits

__________________ 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.