NEUROPATHIX, INC. - Quarter Report: 2018 June (Form 10-Q)

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Mark One

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

COMMISSION FILE NO. 000-55657

TYG SOLUTIONS CORP.

(Exact name of registrant as specified in its charter)

550 West C Street, Suite 2040

San Diego, CA 92101

(858) 883-2642

(Address and telephone number of principal executive offices)

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 [X] No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes [X] No [   ]

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X]

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years.

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes [   ] No [   ]

Applicable Only to Corporate Registrants

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

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TYG SOLUTIONS CORP.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDEX TO CONDENSED FINANCIAL STATEMENTS

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TYG SOLUTIONS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

June 30, 2018

NOTE 1. GENERAL ORGANIZATION AND BUSINESS

TYG Solutions Corp. (“the Company”) was incorporated under the laws of the state of Delaware on March 25, 2013. The Company began limited operations on May 30, 2013. The Company is engaged in mobile app development and corporate website design.

The Company’s activities are subject to significant risks and uncertainties including failure to increase sales revenue and secure additional funding to properly execute the Company’s business plan.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

Basis of Presentation

The accompanying financial statements have been prepared in accordance with GAAP. The Company’s year-end is December 31. These interim financial statements are condensed and should be read in conjunction with the Company’s annual statements for the year ended December 31, 2017. Interim disclosures generally do not repeat those in annual financial statements.

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 and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

Accounts Receivable

Credit is extended to customers based upon an evaluation of the customer’s financial condition. Accounts receivable are recorded at net realizable value. The Company utilizes a specific identification accounts receivable reserve methodology based on a review of outstanding balances and previous activities to determine the allowance for doubtful accounts. The Company charges off uncollectible receivables at the time the Company determines the receivable is no longer collectible. The Company does not require collateral or other security to support financial instruments subject to credit risk.

Revenue recognition

The Company recognizes revenues in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from contracts with customers”. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

In situations with multiple deliverables, the Company recognizes revenue upon the delivery of the separate elements to the customer and when the Company receives customer acceptance or is otherwise released from its customer acceptance obligations. The Company allocates revenue consideration, based on the relative selling prices of the separate units of accounting contained within an arrangement containing multiple deliverables. Relative selling prices are determined using vendor specific objective evidence, if it exists; otherwise third-party evidence or the Company’s best estimate of selling price is used for each deliverable.

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TYG SOLUTIONS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

June 30, 2018

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

Income Taxes

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold. The Company has no uncertain tax positions that require the Company to record a liability. The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.

The Company recognizes penalties and interest associated with tax matters as part of the income tax provision and includes accrued interest and penalties with the related tax liability in the balance sheet. The Company had no accrued penalties and interest as of June 30, 2018 or December 31, 2017.

Earnings (Loss) per Share

The basic earnings (loss) per share is calculated by dividing our net income available to common shareholders by the number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing our net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. The Company has not issued any potentially dilutive debt or equity securities.

Recently issued accounting pronouncements

The Company adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” as of January 1, 2018. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

NOTE 3. INCOME TAXES

There is no current or deferred income tax expense or benefit allocated to continuing operations for the three-month periods ended June 30, 2018 and 2017.

The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. As of June 30, 2018 and December 31, 2017, applying the statutory income tax rate the Company had deferred tax assets of approximately $54,327 and $28,753 related to net operating losses, respectively. A valuation allowance was recorded against the tax assets to reduce the carrying value to zero.

As of June 30, 2018, the Company had net operating loss carry-forwards totaling approximately $159,785 which will begin expiring in 2037.

The Company has no uncertain tax positions that require the Company to record a liability.

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TYG SOLUTIONS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

June 30, 2018

NOTE 4. STOCKHOLDERS’ EQUITY

The Company is authorized to issue 200,000,000 shares of $0.0001 par value common stock. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.

Certificate of Designation of Series A Preferred Stock

Effective May 3, 2018, the Company’s Board of Directors authorized and designated 75 shares of the Company’s Preferred Stock as Series A Preferred Stock. Each share of the Series A Preferred Stock is entitled to a liquidation preference of $1,000 per share and is convertible into 1,000 shares of the Company’s common stock. The holders of a majority of the Series A Preferred Stock are entitled to elect up to four (4) directors to the Company’s board of directors and any annual or special meeting and have preferential rights in regard to the election of Series A directors. In all other voting matters, the holders of Series A Preferred Stock are entitled to cast 1,000 votes per share. The foregoing is a summary only. Please refer to the Certificate of Designation of Series A Preferred Stock attached as Exhibit 3.3 to this Report for the complete text of the certificate of designation.

Certificate of Designation of Series B Preferred Stock

Effective May 3, 2018, the Company’s Board of Directors authorized and designated 75 shares of the Company’s Preferred Stock as Series B Preferred Stock. Each share of the Series B Preferred Stock is entitled to a liquidation preference of $1,000 per share and is convertible into 1,000 shares of the Company’s common stock. The holders of a majority of the Series B Preferred Stock are entitled to elect up to three (3) directors to the Company’s board of directors and any annual or special meeting and have preferential rights in regard to the election of Series B directors. In all other voting matters, the holders of Series B Preferred Stock are entitled to cast 1,000 votes per share. The foregoing is a summary only. Please refer to the Certificate of Designation of Series B Preferred Stock attached as Exhibit 3.4 to this Report for the complete text of the certificate of designation.

NOTE 5. CONFLICTS OF INTEREST

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

NOTE 6 – RELATED PARTY LOANS AND TRANSACTIONS

As of June 30, 2018 and December 31, 2017, loans and advances from related parties amounted to $25,822 and $25,822, respectively. The loans represent working capital advances from shareholders, are unsecured, interest bearing 0.5%, and matures on March 31, 2020 and grant a security interest in the Company’s assets as collateral.

As of June 30, 2018 and December 31, 2017, due to related parties amounted to $27,305 and $18,768, respectively. The amounts due related parties represent working capital advances and fees for work performed by officers and shareholders, are unsecured, non interest bearing and are due upon demand.

On February 16, 2018 the Company issued a convertible note to a shareholder, face value $500,000, in exchange for $500,000 in cash. The Note is unsecured, bears interest at the rate of 3% per annum and matures on February 16, 2030. The Note is convertible into common stock of the Company at $0.10 per share at any time at the option of the holder, subject to a 4.9% blocking provision which prohibits the holder from converting into common stock of the Company if such conversion results in the holder owning greater than 4.9% of the outstanding common stock of the Company after giving effect to the conversion.

As of June 30, 2018 and December 31, 2017, due from related parties amounted to $142,500 and $0, respectively. The amounts due from related parties represent working capital advances, are unsecured, non-interest bearing and are due upon demand.

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TYG SOLUTIONS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

June 30, 2018

NOTE 7. SUBSEQUENT EVENTS

Management has evaluated all subsequent events through the date the financials were issued. There are no subsequent events to report.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

All adjustments necessary for a fair statement of the results for the interim periods have been made, and all adjustments are of normal recurring nature.

GENERAL

Overview

TYG Solutions Corp. was incorporated in the State of Delaware on March 25, 2013. Our original business plan was to develop iPhone and Android smartphone apps for companies who need an app for their internal and external operations. Currently, we are focusing our operation on offering corporate website design services.

The Company’s fiscal year end is December 31. The Company’s principal executive office and mailing address is 550 West C Street, Suite 2040, San Diego, CA 92101.

On June 1, 2014, we entered into an Application Development Agreement with a client to develop an inventory app. The company has completed the app and delivered the completed app to the client. The total price we charged the client for our services was $7,500, the client has paid the Company the full amount.

On March 20, 2015, the Company entered into an Application Development Agreement with a client, whereby the client agreed to pay the company to develop certain iPhone and Android applications that include a Package tracking app, Voice recording app, Compare prices app, File sharing app, Screen recorder app, Puzzle game, Card game, Adventure game, News template app and a Weather broadcast app. The total price we charged the client for our services was $90,000. The Company completed the apps and delivered the files to client. The client paid the Company the full amount.

On March 20, 2015, the Company entered into an Application Development Agreement with a client, whereby the client agreed to pay the Company to develop a Photo Viewer app. The total price we charged the client for our services was $15,000. The Company completed the apps and delivered the files to client. The client paid the Company the full amount.

On March 31, 2015, the Company entered into an Application Development Agreement with a client, whereby the client agreed to pay the company to develop certain iPhone and Android that include a Video editor app, Group chat app, Video surveillance app and a Trivia game. The total price we charged the client was $40,000. The Company completed the apps and delivered the files to client.

On November 19, 2015, the Company entered into an Application Development Agreements with a client, whereby the client agreed to pay the Company to develop certain iPhone and Android applications. The total adjusted price we charged the client was $20,000. The Company completed the apps and delivered the files to client. The client paid the Company the full amount.

On December 15, 2015, the Company entered into an Application Development Agreement with a client, whereby the client agreed to pay the Company to develop certain iPhone and Android applications. The total price we charged the client was $15,000. The Company completed the apps and delivered the files to client.

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On May 1, 2018, the Company’s Certificate of Incorporation was amended and restated to: (i) increase the total stock the Company is authorized to issue to 205,000,000 shares consisting of (a) 200,000,000 shares of Common stock, $0.0001 par value per share (“Common Stock”), and (b) 5,000,000 shares of Preferred stock, $0.0001 par value per share (“Preferred Stock”); (ii) authorize the directors of the Company to designate the shares and series of the Preferred Stock; (iii) provide indemnification for representatives of the Company; and (iv) in the event that any stockholder owns more than 5% of any class of equity security of the Company, require the approval of 75% of the voting securities of the Company for any proposed merger, consolidation or sale of substantially all of the assets of the Company.

On May 2, 2018, the Company’s Bylaws were amended and restated to amend the Company’s stockholder voting procedures, increase the size of the Company’s Board of Directors from two members to seven directors comprised of up to four Series A Directors and up to three Series B Directors, provide, provide greater indemnification by the Company of its officers, directors and employees, and define procedures for any future amendments to the Company’s Bylaws.

Target Market

We plan to target mid-size to large companies as app development is suitable for all types of companies that want to modernize their operations. In addition, we plan to target mid-size companies for our website design services.

Marketing and Sales

Currently, our officer and director handles all marketing and sales efforts. Within the next 12 months, we hope to have generated enough revenue to develop a marketing campaign to promote and publicize our website and services.

We do not have any specific marketing channels in place at this point to be able to market our services to potential customers. However, in the next twelve months, we hope to attend conferences, advertise by word of mouth and possible reach out to local businesses to sell our services. We do expect that the biggest part of our marketing and sales strategy will be from word of mouth advertising. Referrals from people that were pleased with our level of service will be our most efficient form of marketing.

Competition

The app development and website design industry is highly competitive because the barrier to entry is very low. Additionally, the market is very fragmented with many small companies competing against each other. We expect to be able to compete by providing responsive and knowledgeable consultants at reasonable prices.

Services Pricing

We anticipate that our fees would start at $5,000 for easier, simpler applications and get more expensive as detail and complexity increase. To date, we have entered into agreements with six (6) clients and have charged them each flat fees ranging from $7,500 to $90,000.

Employees

We presently have no employees apart from our officers and directors. Our officers and directors devote about 20 hours per week to our affairs

RESULTS OF OPERATIONS

For the Three Month Period Ended June 30, 2018 Compared to Three Month Period Ended June 30, 2017

Revenue

During the three months ended June 30, 2018, the Company earned $0 in revenues compared to the three month’s ended June 30, 2017, when the Company also earned $0 in revenue. The decline in revenues is due the Companies inability to sign new customers.

Cost of Revenue

During the three months ended June 30, 2018, the Company’s cost of revenue was $0 compared to the three month’s ended June 30, 2017, when the Company’s cost of revenue was also $0. Generally, cost of revenue consists of developmental fees paid to third parties that assist in the development of the Company’s apps.

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Operating Expenses

During the three month period ended June 30, 2018, we incurred general and administrative expenses of $50,035 compared to $4,155 during the three month period ended June 30, 2017. General and administrative expenses incurred generally related to corporate overhead, financial and administrative contracted services, such as legal, accounting, and marketing expenses. The increase in general and administrative cost of $45,880 is due to new fees for the new management and increased attorney fees. During the three month period ended June 30, 2018, we incurred interest expenses of $3,792 compared to $0 during the three month period ended June 30, 2017. The increase in interest expense of $3,792 is due to a new note issued by the Company and monies advanced by a shareholder.

Net loss

Our net loss for the three month period ended June 30, 2018 was $53,827 compared to $4,155 during the Three month period ended June 30, 2017 due to the factors discussed above.

For the Six Month Period Ended June 30, 2018 Compared to Six Month Period Ended June 30, 2017

Revenue

During the six months ended June 30, 2018, the Company earned $0 in revenues compared to the six month’s ended June 30, 2017, when the Company earned $1,154 in revenue. The decline in revenues is due the Companies inability to sign new customers.

Cost of Revenue

During the six months ended June 30, 2018, the Company’s cost of revenue was $0 compared to the six month’s ended June 30, 2017, when the Company’s cost of revenue was also $0. Generally, cost of revenue consists of developmental fees paid to third parties that assist in the development of the Company’s apps.

Operating Expenses

During the six month period ended June 30, 2018, we incurred general and administrative expenses of $69,508 compared to $9,710 during the six month period ended June 30, 2017. General and administrative expenses incurred generally related to corporate overhead, financial and administrative contracted services, such as legal, accounting, and marketing expenses. The increase in general and administrative cost of $59,798 is due to new fees for the new management and increased attorney fees. During the six month period ended June 30, 2018, we incurred interest expenses of $5,708 compared to $0 during the six month period ended June 30, 2017. The increase in interest expense of $5,708 is due to a new note issued by the Company and monies advanced by a shareholder.

Net loss

Our net loss for the six month period ended June 30, 2018 was $75,216 compared to $8,556 during the six month period ended June 30, 2017 due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

As at June 30, 2018 our current assets were $440,146 compared to $1,887 in current assets at December 31, 2017. As at June 30, 2018, our current liabilities were $64,181 compared to $50,705 as of December 31, 2017.

Stockholder’s deficit was $124,035 as of June 30, 2018 compared to $48,818 as of December 31, 2017.

Cash Flows from Operating Activities

For the six month period ended June 30, 2018, net cash flows used in operating activities were $70,147 compared to net cash used in operating activities of $10,374 for the six months ending June 30, 2017.

Cash Flows from Investing Activities

For the six month period ended June 30, 2018, net cash flows used in investing activities were $142,500 compared to net cash used in operating activities of $0 for the six months ending June 30, 2017.

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Cash Flows from Financing Activities

Cash flows provided by financing activities during the six months ended June 30, 2018 were $508,536 and consisted of proceeds from a convertible note and related party loans compared to cash used by financing activities of $10,376 for the six months ended June 30, 2017, which consisted of net proceeds from related party loans.

PLAN OF OPERATION AND FUNDING

Revenues, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, 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 are material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 4. CONTROLS AND PROCEDURES

We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation 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) as of the end of the period covered by this quarterly report.

Based on this evaluation, our chief executive officer and chief financial officer concluded that as of the evaluation date our disclosure controls and procedures were not effective. Our procedures were designed to ensure that the information relating to our company required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure. Management is currently evaluating the current disclosure controls and procedures in place to see where improvements can be made.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

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Under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in “Internal Control Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this evaluation, management has concluded that our internal control over financial reporting was not effective as of June 30, 2018, to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Steps that the Company believes it must undertake is to retain a consulting firm to, among other things, design and implement adequate systems of accounting and financial statement disclosure controls during the current fiscal year to comply with the requirements of the SEC. We believe that the ultimate success of our plan to improve our disclosure controls and procedures will require a combination of additional financial resources, outside consulting services, legal advice, additional personnel, further reallocation of responsibility among various persons, and substantial additional training of those of our officers, personnel and others, including certain of our directors such as our committee chairs, who are charged with implementing and/or carrying out our plan.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as required in Rule 13a-15(b). We are conducting an evaluation to design and implement adequate systems of accounting and financial statement disclosure controls. We expect to complete this review during 2018 to comply with the requirement of the SEC. We believe that the ultimate success of our plan to improve our internal control over financial reporting will require a combination of additional financial resources, outside consulting services, legal advice, additional personnel, further reallocation of responsibility among various persons, and substantial additional training of our officers, personnel and others, including certain of our directors such as our Chairman of the Board and Chief Financial Officer, who are charged with implementing and/or carrying out our plan. It should also be noted that the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting, or any system we design or implement in the future, will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control

There have not been any changes in our internal control over financial reporting during the three month period ended June 30, 2018, 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

ITEM 1A. RISK FACTORS

Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

No equity securities were sold during the three month period ended June 30, 2018.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

ITEM 4. MINE SAFETY DISCLOSURES

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant cause this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 23, 2018

/s/ Robert T. Malasek

Robert T. Malasek

Chief Executive Officer

(Principal Executive Officer)

Chief Financial Officer

(Principal Accounting Officer)

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