Newpoint Financial Corp - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

EXCHANGE ACT

Commission File Number: 000-54953

NEWPOINT FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Phone number: (860) 574-9190

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the 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, or a smaller reporting 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 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 ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ☐    No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 19,153,923 shares of common stock as of June 30, 2022.

NEWPOINT FINANCIAL CORP.

FORM 10-Q

TABLE OF CONTENTS

INFORMATION REGARDING FORWARD-LOOKING DISCLOSURE

This quarterly report on Form 10-Q contains forward-looking statements. Statements in this report that are not historical facts, including statements about management’s beliefs and expectations, constitute forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K, and any updated risk factors we include in our quarterly reports on Form 10-Q and other filings with the SEC. Forward- looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:

Investors should carefully consider these factors and the additional risk factors outlined in more detail under Item 1A, Risk Factors, in our 2021 Annual Report on Form 10-K and other filings with the SEC.

PART I

ITEM 1 FINANCIAL STATEMENTS

NEWPOINT FINANCIAL CORP.

UNAUDITED CONDENSED FINANCIAL STATEMENTS

June 30, 2022

CONTENTS

NEWPOINT FINANCIAL CORP.

UNAUDITED CONDENSED BALANCE SHEETS

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

NEWPOINT FINANCIAL CORP.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS COMPREHENSIVE INCOME

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

NEWPOINT FINANCIAL CORP.

UNAUDITED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY

For The Six Months Ended June 30, 2022 and 2021

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

NEWPOINT FINANCIAL CORP.

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

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

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022 and June 30, 2021

(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Newpoint Financial Corp. (“Newpoint”) was incorporated in the State of Delaware on November 16, 2005 under the name Blue Ribbon Pyrocool, Inc. (“Blue Ribbon”). Blue Ribbon changed its name to Classic Rules Judo Championships, Inc. on July 15, 2008 then to Judo Capital Corp on February 15, 2017. The entity is referred to as “the Company”. The Company formed a subsidiary in the State of Connecticut on August 13, 2008 named Classic Rules World Judo Championships, Inc. to develop an annual judo championship tournament, this subsidiary is no longer active and has ceased to exist.

On June 2, 2014, the Company ceased its principal activities of hosting and sponsoring judo tournaments and dissolved Classic Rules World Judo Championships, Inc. The Company had planned to operate in real estate investment market focused in the New York City metropolitan area. On February 28, 2018, the Company ceased its plans to operate in the real estate investment market. On January 19, 2021, the Company had a 500-1 reverse stock split with FINRA and Change of Control. On February 9, 2021, new officers and directors were elected and the name of the Company was changed to Newpoint Financial Corp. (Delaware) on February 12, 2021.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements as of the six months ended June 30, 2022 and June 30, 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. They should be read in conjunction with the Company’s annual report on Form 10- K for the year ended December 31, 2021. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to fairly present the financial position as of June 30, 2022 and the results of operations for the six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from the estimates as additional information becomes known.

Cash and Cash Equivalents

Cash and cash equivalents includes highly liquid instruments with original maturities of three months or less.

Investments

Short-term investments, Fixed maturities and equity securities

Short-term investments comprise investments with a maturity greater than three months up to one year from the date of purchase. Short-term investments are carried at fair value, with realized and unrealized gains and losses included in net earnings are reported as net realized and unrealized gains and losses, respectively.

Investments in debt securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value on the balance sheet in current assets, with the change in fair value during the period included in earnings. Debt securities held as investments that the Company classifies as held-to-maturity securities are recorded at amortized cost, net of a valuation allowance for credit losses. Investments in debt securities not classified as either held-to-maturity or trading securities are classified as available-for-sale securities. Available-for-sale securities are recorded at fair value, with the change in fair value during the period excluded from earnings and recorded net of tax as a component of other comprehensive income.

Investments in Equity securities are reported at fair value with realized and unrealized gains and losses included in net earnings are reported as net realized and unrealized gains and losses, respectively. If there are no readily determinable fair values, investments in equity securities are measured at cost less impairment.

Valuation allowance for fixed income securities

Management evaluates impairment losses for all HTM securities each quarter. The HTM securities are evaluated for potential credit loss on investments not measured at fair value through net earnings. Our allowance for credit losses is derived based on various data sources, multiple key inputs and forecast scenarios. These include default rates specific to the individual security, vintage of the security, geography of the issuer of the security, industry analyst reports, credit ratings and consensus economic forecasts. Securities that meet any one of the criteria included above will be subject to a discounted cash flow analysis by comparing the present value of expected future cash flows with the amortized cost basis. Projected cash flows are driven primarily by assumptions regarding probability of default and the timing and amount of recoveries associated with defaults.

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022

(Unaudited)

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying value of cash and cash equivalents and accounts payable approximate their fair value because of the short-term nature of these instruments and their liquidity. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Income Taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of June 30, 2022 and December 31, 2021 the Company has not recorded any unrecognized tax benefits.

Segment Reporting

The Company’s business currently operates in one segment.

Net Loss per Share

The computation of basic net loss per common share is based on the weighted average number of shares that were outstanding during the year. The computation of diluted net loss per common share is based on the weighted average number of shares used in the basic net loss per share calculation plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method.

Recently Issued Accounting Pronouncements

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion. The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022

(Unaudited)

Related Parties (Continued)

Pursuant to Section 850-10-20 the related parties include (a) affiliates of the registrant; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has no revenues, has incurred net losses of $429,028 and $59,546 during the six months ended June 30, 2022 and June 30, 2021. The Company has an accumulated deficit of $961,118 and $532,090 as of June 30, 2022 and December 31, 2021, respectively, and has not received any significant cash flows from operations. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company to date has been financially supported by related party entities which are also owned by the majority shareholders of the Company. The Company will continue to be financially supported by related party entities until such time as the Company generates sufficient cashflow to support its expense requirements or completes an external capital raising.

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022

(Unaudited)

NOTE 4 – INVESTMENTS

On December 10, 2021, the Company entered into a stock purchase agreement with Novea Inc., a Wyoming corporation (“Novea”), whereby we acquired five hundred thousand (500,000) units (“Units”), each Unit having a stated value of $100 and consisting of (i) one share of Series B Convertible Redeemable Preferred Stock (“Novea Preferred Stock”) and (ii) 2.503474 shares of common stock of Novea (“Novea Common Stock”). We also acquired a warrant exercisable for ten years for additional shares of common stock of up to $50,000,000, subject to adjustment as set forth therein. In aggregate, we acquired (i) 500,000 shares of Novea Preferred Stock, (ii) 1,251,737 shares of Novea Common Stock, representing ten percent (10%) of Novea’s common stock, and (iii) one warrant to purchase up to $50,000,000 of Novea Common Stock. Novea is a financial and insurance services software Company.

As consideration for such purchase, Newpoint Financial Corp (a Wyoming corporation), now known as NPFC SPV 1, Inc., an entity that was owned by the current controlling shareholders, issued to Novea ten (10) secured $5,000,000 notes (each a “Collateral Note”), totalling $50,000,000. The Collateral Notes are due on demand and we have the right to prepay the Collateral Notes at any time on NPFC SPV 1, Inc’s behalf.

As of June 30, 2022 and December 31, 2021, investments in debt securities include mandatorily redeemable preferred stock which is classified as held to maturity, with a term ending in December 2031. The amortized cost was $50,000,000 as of June 30, 2022 and December 31, 2021. The Novea Common Stock and warrants purchased as part of the transaction are considered to have a de minimis value as of December 31, 2021. Novea issued 1,251,737 shares of Novea Common Stock to the Company, representing ten percent (10%) of Novea’s common stock outstanding. The shares issued had no par value. Novea is a private Company and does not have a readily determinable fair value.

NOTE 5 - DEPOSITS

In August, 2021, the Company entered into an agreement with Citadel Risk Holdings, Inc., (“CRHI”) which owns all the shares of American Millennium Insurance Co., (“AMIC”) a New Jersey based insurance Company. We agreed to purchase 3.75% of AMIC’s outstanding shares per year over the course of 10 years for an aggregate total 37.5% of outstanding shares at the end of the term. Closing is expected to occur in 2022 subject to receipt of regulatory approval and other customary closing conditions. As of March 31, 2022, NPFC SPV1, Inc. had made a deposit of $1,000,000 to AMIC, on behalf of the Company, as part of an agreement that remains subject to approval.

NOTE 6 – CREDIT COMMITMENT

The Company entered into a five (5) year revolving credit facility agreement with Novea dated as of December 10, 2021 (“Credit Facility”). The Credit Facility provides for a revolving credit with a commitment equal to the lesser of: (i) $5,000,000; or (ii) on any amount greater than $500,000, the lender shall only disburse any such excess up to the amount of 50% of the qualified receivables outstanding of the borrower, bearing interest at LIBOR plus 5.25%. As of June 30, 2022, and December 31, 2021 there was $4,669,200 and $4,836,500 respectively of additional borrowings available to Novea subject to the borrowing criteria.

Newpoint Financial Corp.

Notes to Financial Statements

June 30, 2022

(Unaudited)

NOTE 7 – RELATED PARTY TRANSACTIONS AND NOTE PAYABLE

 SCHEDULE OF RELATED PARTY TRANSACTION

NOTE 8 – STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001 per share. There were no shares of preferred stock issued or outstanding as of June 30, 2022 or December 31, 2021.

Common Stock

The Company is authorized to issue up to 100,000,000 shares of common stock with a par value of $0.001 per share. As of June 30, 2022 and December 31, 2021 there were 19,153,923 shares of common stock issued and outstanding. During the six months ended June 30, 2021, the Company issued 18,937,738 shares to settle related party liabilities.

NOTE 9 – SUBSEQUENT EVENTS

The Company is in the process of seeking regulatory approval for the Company’s acquisition of AMIC and CRHI shares. Upon approval, we expect the transactions to be completed sometime in 2022.

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

Forward-Looking Statements

This report contains forward-looking statements. The statements regarding Newpoint Financial Corp. contained in this report that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “plans,” or comparable terminology, are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements.

Important factors known to us that could cause such material differences include uncertainties associated with the following:

We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the SEC.

Overview

Newpoint Financial Corp., a Delaware corporation (the “Company,” “we,” “us,” or “our”) is a holding Company that strategically invests primarily in regulated entities such as banks and insurance companies. These investments may be result in us acquiring a controlling or non-controlling interests of these entities. To date, we have entered into three such transactions (one of which has closed): in December 2021 we acquired a 10% interest in Novea, Inc., a financial and insurance services software Company; we have also entered into an agreement for the acquisition of an interest in American Millennium Insurance Co., a New Jersey based insurance Company through purchase of shares of its parent holding companies. Closing is subject to receipt of regulatory approvals and other customary closing conditions.

Since our current investments (one of which has closed) constitute (or will constitute) a minority interest in these companies, we anticipate that our income will be dependent on the ability of these companies to generate revenue and payment of dividends.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain of the Company’s accounting policies that we believe are the most important to the portrayal of the Company’s financial condition and results of operations and that require management’s subjective judgments are described below to facilitate a better understanding of our business activities. Management bases its judgments on its experience and assumptions which it believes are reasonable and applicable under the circumstances.

We expect that uncertainty and volatility in financial markets relating to the COVID-19 pandemic will continue to impact the Company. The scope, duration and magnitude of the direct and indirect effects of the COVID-19 pandemic are changing rapidly and are difficult to anticipate.

We are subject to economic factors such as interest rates, inflation, foreign exchange rates, adverse reserve developments, regulation, tax policy changes, political risks and other market risks that can impact our strategy, operations, and results.

Results of Operations for the three and six months ended June 30, 2022 and June 30, 2021

Revenues . The Company had no revenue during the six months ended June 30, 2022 and the six months ended June 30, 2021.The Company had no revenue during the 3 months ended June 30, 2022 and June 30, 2021.

Cost of Revenues . The Company had no cost of revenues for the six months ended June 30, 2022 and the six months ended June 30, 2021. The Company had no cost of revenues for the 3 months ended June 30, 2022 and June 30, 2021.

General and Administrative expenses. The Company incurred $84,010 of general and administrative expenses during the six months ended June 30, 2022 compared to $20,924 during the same period in 2021. The Company incurred $63,389 of general and administrative expenses during the three months ended June 30, 2022 compared to $0 during the same period in 2021. The costs increase related to travel, subscriptions and IT services.

Professional fees. The Company incurred $106,450 of professional fees during the six months ended June 30, 2022 compared to $38,622 during the same period in 2021. The Company incurred $91,994 of professional fees during the three months ended June 30, 2022 compared to $38,622 during the same period in 2021. The increase in professional fees is the result of the Company incurring costs associated with consultants and transfer agent costs during the period.

Loss From Operations. The Company incurred an operating loss of $190,460 during the six months ended June 30, 2022 compared to $59,546 during the same period in 2021. The Company incurred an operating loss of $155,382 during the three months ended June 30, 2022 compared to $38,622 during the same period in 2021. The increase in net loss is a result of increased professional fees and additional costs associated with the change in control.

Other Income (Expense). The Company accrued interest income of $11,985 during the six months ended June 30, 2022 compared to $0 during the six months ended June 30, 2021. The Company accrued interest income of $7,125 during the three months ended June 30, 2022 compared to $0 during the six months ended June 30, 2021.

Net Loss. The Company incurred a net loss of $429,028 during the six months ended June 30, 2022 compared to $59,546 during the same period in 2021. The Company incurred a net loss of $256,344 during the three months ended June 30, 2022 compared to $38,622 during the same period in 2021. The increase in net loss is a result of increased general and administrative and professional fees.

Liquidity and Capital Resources

As of December 31, 2021, the Company had cash of $5,843, with current assets totalling $5,843 and current liabilities totalling $99,751 creating a working capital deficit of $93,908. Current liabilities consisted of accounts payable and accrued liabilities totalling $31,370, related party payable of $68,021

As of June 30, 2022, the Company had cash of $39,543 with current assets totalling $46,668 and current liabilities totalling $569,603 creating a working capital deficit of $522,935. Current liabilities consisted of accounts payable of $6,730, related party payable of $522,873 and other current liabilities of $40,000.

Cash Flows

Net cash generated in operating activities was $33,700 and $0 during the six months ended June 30, 2022 and 2021, respectively.

There were no cash flows from investing activities during the six months ended June 30, 2022 and 2021, respectively.

There were no cash flows from financing activities during the six months ended June 30, 2022 and 2021, respectively.

Off-Balance Sheet Arrangements

During 2021, the Company entered into a revolving credit commitment with Novea, Inc. The initial borrowing of the revolving credit loans under the revolving credit commitments may be an amount up to $500,000. Subject to agreed terms, the total obligation of the Company to make revolving credit loan in an aggregate principal amount shall not exceed $5,000,000. The loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate equal to LIBOR plus 5.25%.

The Company entered into a Revolving Credit Facility Agreement (the “RCFA”) with Newpoint Reinsurance Company Limited, an entity owned by the Company’s principal shareholders. The RCFA provides for available borrowings up to $1,000,000 for a term of three years and an option to roll the facility. As of December 31, 2021 the Company has additional available borrowings of $836,500 after it was provided $163,500 as a related party transaction for the credit commitment agreement with Novea. As of March 30, 2022 Newpoint Capital Limited made a payment of $167,300 on behalf of the Company as per credit agreement with Novea

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

Disclosure Controls and Procedures

The Securities and Exchange Commission, or the SEC, defines the term “disclosure controls and procedures” to mean a Company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to its chief executive officer to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer has concluded that the Company’s disclosure controls and procedures were not effective as of such date due to the material weaknesses identified in the Company’s annual report on Form 10-K for the year ending December 31, 2021.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with our evaluation of these controls as of the end of our last fiscal quarter as covered by this report on June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Company’s management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error or all fraud and is not effective. 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 a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. 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.

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.

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

No disclosure required.

Item 5. Other Information.

None.

Item 6. Exhibits.

SIGNATURES

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