Touchpoint Group Holdings Inc. - Quarter Report: 2022 September (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 September 30, 2022

or

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

ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-36530

Touchpoint Group Holdings, Inc. 

(Exact name of registrant as specified in its charter)

(305) 420-6640 

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

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 smaller 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 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  ☑

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of November 08, 2022, there were outstanding 3,442,488,894 shares of the registrant’s common stock, par value $0.000001 per share. 

TABLE OF CONTENTS

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

The statements made in this Report, and in other materials that the Company has filed or may file with the Securities and Exchange Commission, in each case that are not historical facts, contain “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “projects,” “estimates,” “believes,” “seeks,” “could,” “should,” or “continue,” the negative thereof, and other variations or comparable terminology as well as any statements regarding the evaluation of strategic alternatives. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. These risks include, but are not limited to, risks and uncertainties relating to our current cash position and our need to raise additional capital in order to be able to continue to fund our operations; our ability to retain our managerial personnel and to attract additional personnel; competition; our ability to protect intellectual property rights, and any and other factors, including the risk factors identified in the documents we have filed, or will file, with the Securities and Exchange Commission.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any document incorporated herein by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the respective dates of this report or the date of the document incorporated by reference in this report. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

These and other matters the Company discusses in this Report, or in the documents it incorporates by reference into this Report, may cause actual results to differ from those the Company describes. The Company assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

TOUCHPOINT GROUP HOLDINGS, INC. 

Condensed Consolidated Balance Sheets 

September 30, 2022 and December 31, 2021 

(in thousands, except share data) 

See accompanying notes to unaudited condensed consolidated financial statements. 

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Operations

For the three and nine months ended September 30, 2022 and 2021

(in thousands, except per share data)

(unaudited)

See accompanying notes to unaudited condensed consolidated financial statements. 

TOUCHPOINT GROUP HOLDINGS, INC.  

Condensed Consolidated Statements of Comprehensive Loss

For the three and nine months ended September 30, 2022 and 2021

(in thousands)

(unaudited)

See accompanying notes to unaudited condensed consolidated financial statements. 

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Statement of Equity

For the nine months ended September 30, 2022 and 2021

(in thousands)

(unaudited)

See accompanying notes to condensed consolidated financial statements.

TOUCHPOINT GROUP HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 30, 2022 and 2021

(in thousands)

(unaudited)

See accompanying notes to unaudited condensed consolidated financial statements. 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

Note 1. Description of Business, Organization and Principles of Consolidation

Description of Business

The Company has the following businesses:

TGHI brings users closer to the action by enabling them to engage with clubs, favorite players, peers and relevant brands through features that include live streaming, access to limited edition merchandise, gamification (chance to win unique one-off life experiences), user rewards, third party branded offers, credit cards and associated benefits. 

TGHI signed a worldwide IP license and Royalty Agreement on February 22, 2022 with GBT Technologies Inc. “GBT” which enables TGHI to license GBT software and technology and to split any royalties earned with GBT on a 50/50 basis.

TGHI acquired certain rights to the World Championship Air Race (“WCAR”) on September 20, 2021, through an asset purchase agreement for approximately $70,000. Management and all key operational staff for the WCAR joined Touchpoint’s wholly owned subsidiary, Air Race Limited (“ARL”), under long-term agreements. In addition, all key supplier, participating host city and participating team contracts were assumed by ARL. Due to current global financial and logistical conditions, we have made the difficult decision to cease all activity in Air Race Limited and designate it as a discontinued operation. As of September 30, 2022, liabilities associated with discontinued operations comprised of a $750,000 deposit for Air Races. Net loss from discontinued operations for the three and nine months ended September 30, 2022 comprised write offs of prepaid expenses, property and equipment, and intangible assets of approximately $970,000, $550,000, and $80,000, respectively, associated with WCAR.

The Company is primarily based in the United States of America and the United Kingdom

Interim Period Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the SEC’s rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 15, 2022.

Note 2. Summary of Significant Accounting Policies

Liquidity and Capital Resources

The Company has incurred net losses and negative cash flows from operations which raise substantial doubt about the Company’s ability to continue as a going concern. The Company has principally financed these losses from the sale of equity securities and the issuance of convertible debt instruments.

The Company will be required to raise additional funds through various sources, such as equity and debt financings. While the Company believes it is probable that such financings could be secured, there can be no assurance the Company will be able to secure additional sources of funds to support its operations, or if such funds are available, that such additional financing will be sufficient to meet the Company’s needs or on terms acceptable to us.

Basis of Accounting and Presentation

These condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

Accounts Receivable, Revenue Recognition and Concentrations

Performance Obligations - A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.

Revenue Recognition – We recognize revenues from each business segment as described below:

— Continued operations

Impairment of Other Long-Lived Assets

The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and nine months ended September 30, 2022 and 2021, outstanding warrants and shares underlying convertible debt are antidilutive because of net losses, and as such, their effect was not included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

Property, Plant and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided for using straight-line methods, in amounts sufficient to charge the cost of depreciable assets to operations over their estimated service lives.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal period. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. 

Note 3. Intangible Assets

Intangible assets consist of the following (in thousands): 

Note 4. Notes payable

a) Promissory notes, related parties

The promissory notes due to Zhanming Wu ($500,000) and the Company’s CEO, Mark White ($500,000), both considered related parties, including accrued interest of 7% per annum from issuance, were due for repayment on August 31, 2019. During the three months ended September 30, 2022 the promissory for $500,000 due to Mark White was exchanged for $500,000 of Class C Preferred Shares. As of September 30, 2022, Mr. Wu had not demanded repayment of his promissory notes.

Convertible Loans Payable

Schedule of convertible loans payable

Note 5. Share Capital

Preferred Shares

The Company is authorized to issue 50,000,000 shares of preferred stock. The Board of Directors determines the number, terms and rights of the various classes of preferred stock.

Class A

The Company has designated 50,000 preferred shares as Class A Preferred Shares. Each Class A Preferred Share has a stated value of $12.50 per share and is convertible into 1,000 shares of common stock any time after July 1, 2022.

Class B

The Company has designated 1,000,000 preferred shares as Class B Preferred Shares. Each Class B Preferred Share has a stated value of $1.00 per share and is convertible into one share of common stock, equivalent to 65% of the trailing 15 day VWAP any time after July 1, 2022.

Class C

The Company has designated 600,000 preferred shares as Class C Preferred Shares. Each class C Preferred share has a stated value of $1.00 per share, is convertible into Common Shares at common share price of $0.0015 per share, and have voting rights, with common shareholders, of 8 votes per Class C Preferred Share.

Common Stock

Effective September 08, 2022, the Company amended its Articles of Incorporation increasing the number of authorized shares of common stock from 1,750,000,000 to 30,000,000,000 and reduced the par value of common stock to $0.000001.

During the nine months ended September 30, 2022, the Company issued the following shares:

Class C Preferred Shares

Class B Preferred Shares

Class A Preferred Shares

Common Stock

Stock Purchase Warrants

At September 30, 2022, the Company had reserved 625,608,673 shares of its common stock for the following outstanding warrants:

Schedule of warrants 

During the nine months ended September 30, 2022, 666,574,000 warrants were issued as part of debt financings, 93,613,054 warrants were exercised and no warrants were forfeited. The relative fair value of the warrants was recorded as a debt discount at issuance and is amortized over the life of the related debt.  As a result of issuances during the quarter, an anti-dilution provision was triggered, increasing the number of warrants held by one party from 6,500,000 to 44,484,000 which were all exercised during the three months ended September 30, 2022.

During the nine months ended September 30, 2022, the Company also issued 808,340,000 warrants, and reserved the same number of shares of its common stock, to purchase shares of its common stock at prices of $0.002 to $0.0006 per share solely as security in the event the Company defaults on certain borrowings which are due to be settled in full, either by repaying in cash or converting to shares of common stock, on or before September 23, 2023.

A summary of the weighted average inputs used in measuring the fair value of warrants issued during the nine months ended September 30, 2022 are as follows:

Note 6. Stock-Based Compensation

On August 6, 2013, the Company’s shareholders approved the 2013 Equity Incentive Plan (“2013 Plan”). The 2013 Plan provides for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company.

There were no options issued during the nine months ended September 30, 2022 and there were no options outstanding as at September 30, 2022.

In March 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) to provide additional incentives to the employees, directors and consultants of the Company to promote the success of the Company’s business. During the nine months ended September 30, 2022, no common stock of the Company was issued under the 2018 Plan.

Note 7. Subsequent Events

In the period from October 01, 2022 to November 17, 2022 convertible loan notes totaling $470,466 were converted into common stock totaling 1,748,822,857 shares of common stock.

On October 18, 2022, the Company issued a promissory note for a loan of $71,000. The loan is due October 18, 2023, has a 10% OID and accrues interest at 12%. The Company also issued a warrant for 100 million shares exercisable for five years at $0.0002 together with a special warrant for 100 million shares exercisable for five years at $0.0002. This special warrant is for loan security and is cancellable.

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

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022 and 2021 and notes thereto contained elsewhere in this Report, and our annual report on Form 10-K for the twelve months ended December 31, 2021 including the consolidated financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See “Cautionary Note Concerning Forward-Looking Statements.”

Overview

We are a holding company which, through our operating subsidiaries, is engaged in media and digital technology, primarily in sports entertainment and related technologies that bring fans closer to athletes and celebrities.

Current Structure of the Company

The Company has the following subsidiaries:

In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a limited liability company, organized in China and controlled by us via various contractual arrangements. Suzhou Aishuo is treated as one of our subsidiaries for financial reporting purposes in accordance with generally accepted accounting principles in the United States (“GAAP”).

Summary Description of Core Business

We are a software developer which supplies a robust fan engagement platform designed to enhance the fan experience and drive commercial aspects of the sport and entertainment business.

We bring users closer to the action by enabling them to engage with clubs, favorite players, peers and relevant brands through features, available through the Touchpoint APP and program, that include live streaming, access to limited edition merchandise, gamification (chance to win unique one-off life experiences), user rewards, third party branded offers, credit cards and associated benefits. 

We are based in the United States of America and the United Kingdom. 

Business update

The Company CEO, Mr. White stated, “We continue to make significant progress advancing our next generation fan engagement platform.   Specifically, we are now working with numerous fitness brands, celebrities and influencers. The customer response has been overwhelmingly positive, as our platform is specifically designed to bring fans closer to celebrities by providing access to proprietary content, livestream events, as well as exclusive merchandise.  To further enhance the platform and add new revenue streams, we are working towards integrating new blockchain machine learning capabilities designed for intuitive analytic feedback, thereby allowing for the creation of highly optimized content strategies both inside the Touchpoint platform and on social media.”

In 2021 and building on our core expertise in fan engagement, we announced last year the acquisition of Air Race World Championship (Air Race), a race format developed by Red Bull as the Red Bull Air Race. Since that time, we had been successful in signing some host-city agreements. Due to the current global financial and logistical conditions we have made the difficult decision to cease all activity in Air Race and designate it as discontinued operation. The management team failed to secure funds from contracted host cities that had committed to hold Air Race world championship events.

We continue to develop our core software business and are seeking new licensees for our Touchpoint Connect platform. In addition, we are exploring additional related applications that we anticipate will add revenue and value to our business.

For more information, see http://touchpointgh.com/  

Results of Operations

Comparison of three months ended September 30, 2022 and 2021

The following table sets forth key components of our results of operations for the periods.

(All amounts, other than percentages, in thousands of U.S. dollars)

Revenue:  Our revenue for the three months ended September 30, 2022, decreased by approximately $22,000 over the same period in 2021. The increase was a result of an decrease in sales of software licenses during the three months ended September 30, 2022.

Gross Deficit:  Gross deficit for the three months ended September 30, 2022, was approximately $29,000 as compared to a deficit of $114,000 for the three months ended September 30, 2021, due primarily to the decrease in the amortization of software.

Operating Expenses:  Operating expenses incurred during the three months ended September 30, 2022, were approximately $387,000, a decrease of approximately $103,000 when compared to the approximate figure of $490,000 incurred in the three months ended September 30, 2021.  

Net Loss:  Net loss from continuing operations for the three months ended September 30, 2022, was approximately $967,000 as compared to net loss from continuing operations of approximately $691,000 for the same period in 2021.

Comparison of nine months ended September 30, 2022, and 2021

The following table sets forth key components of our results of operations for the periods indicated.

(All amounts, other than percentages, in thousands of U.S. dollars)

Revenue: Our revenue for the nine months ended September 30, 2022, was approximately $33,000 as compared to approximately $90,000 for the nine months ended September 30, 2021, a decrease of approximately $57,000. The decrease was due to the decrease in license sales in the second quarter.

Cost of Revenue: Cost of revenue was approximately $93,000 for the nine months ending September 30, 2022, as compared to $417,000 for the nine months ended September 30, 2021, a decrease of $324,000.

Gross Deficit: Gross deficit for the nine months ended September 30, 2022, was approximately $60,000 as compared to a gross deficit of $327,000 for the nine months ended September 30, 2021, a decrease in the deficit of approximately $267,000. The decrease was mainly due to the reduction in the amortization costs related to application software.

Operating Expenses: Operating expenses, including general and administrative expenses, depreciation and acquisition costs for the nine months ended September 30, 2022, were approximately $1,466,000 representing an decrease of approximately $756,000over the charge for the same period of approximately $2,222,000 in 2021. The increase was mainly due to the charge for the issuance of warrants.

Net Loss: Net loss for continuing operations for the nine months ended September 30, 2022 was approximately $3,016,000 as compared to loss for continuing operations of approximately $3,113,000 for the same period in 2021. 

Liquidity and Capital Resources

Nine Months Ended September 30, 2022 and September 30, 2021

The following table sets forth a summary of our net cash flows for the periods indicated:

Net cash used by operating activities of continuing operations increased to $1,179,000 for the nine months ended September 30, 2022 from $1,043,000 for the same period in 2021.

Net cash used from investing activities was approximately $201,000 in the nine months ended September 30, 2022, as compared to net cash used of $78,000 in the comparative period in 2021.

Net cash generated in financing activities was approximately $1,261,000 for the nine months ended September 30, 2022, as compared to $1,029,000 for the nine months ended September 30, 2021. The cash generated from financing activities in the nine months ended September 30, 2022, was primarily from convertible loans raised from US funds, less repayment of a loan raised in 2021.

At September 30, 2022, the Company had cash of approximately $28,000.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared in accordance with GAAP. Our significant accounting policies are described in notes accompanying the unaudited consolidated financial statements. The preparation of the unaudited consolidated financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. Estimates are based on information available as of the date of the unaudited financial statements, and accordingly, actual results in future periods could differ from these estimates. Significant judgments and estimates used in the preparation of the unaudited consolidated financial statements apply significant accounting policies described in the notes to our consolidated financial statements.

We consider our recognition of revenues, accounting for the consolidation of operations, accounting for intangible assets and related impairment analyses, the allowance for doubtful accounts and accounting for equity transactions, to be most critical in understanding the judgments that are involved in the preparation of our unaudited consolidated financial statements.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed financial statements, included in Part I, Item 1., Financial Information of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

As of September 30, 2022, we did 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. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of September 30, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of September 30, 2022, our disclosure controls and procedures were not effective. This was due to certain deficiencies in our controls over financial reporting. In particular a lack of accounting personnel has resulted in an inability to segregate various accounting functions.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly 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.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

PART II – OTHER INFORMATION

ITEM 1A. RISK FACTORS

Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) filed April 15, 2022, which sections are incorporated by reference into this report, as the same may be updated from time to time. Prospective investors are encouraged to consider the risks described in our 2021 Form 10-K, and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities. As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the 2021 Form 10-K. 

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

During the three months ended September 30, 2022, the Company issued shares of common stock as follows:

Class B Preferred Shares

Class A Preferred Shares

Common Stock