# Modular Medical, Inc.: Form 10-K for the period ended Mar 31, 2018

- Company: [Modular Medical, Inc.](/companies/modd.md) (CIK 1074871)
- Form: 10-K
- Filed: 2018-06-29
- Accepted by EDGAR: Jun 29, 2018, 15:31 ET
- Period: 2018-03-31
- Accession: 0001019056-18-000822
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1074871/000101905618000822/modular_10k.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1074871/000101905618000822/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2018-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 12 months, 2017-04-01 to 2018-03-31 | $0 | us-gaap:Revenues |
| Research and development | 12 months, 2017-04-01 to 2018-03-31 | $332.6k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 12 months, 2017-04-01 to 2018-03-31 | −$666.2k | us-gaap:OperatingIncomeLoss |
| Income tax | 12 months, 2017-04-01 to 2018-03-31 | $1.6k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 12 months, 2017-04-01 to 2018-03-31 | −$659.2k | us-gaap:NetIncomeLoss |
| Diluted EPS | 12 months, 2017-04-01 to 2018-03-31 | −$0.05 | us-gaap:EarningsPerShareBasicAndDiluted |
| Diluted shares (weighted) | 12 months, 2017-04-01 to 2018-03-31 | 13,336,309 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2017-04-01 to 2018-03-31 | −$791.1k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months, 2017-04-01 to 2018-03-31 | $15.1k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 12 months, 2017-04-01 to 2018-03-31 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2018-03-31 | $4.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2018-03-31 | $4.3m | us-gaap:AssetsCurrent |
| Total assets | at 2018-03-31 | $4.3m | us-gaap:Assets |
| Current liabilities | at 2018-03-31 | $15.5k | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2018-03-31 | $15.5k | us-gaap:Liabilities |
| Shareholders' equity | at 2018-03-31 | $4.3m | us-gaap:StockholdersEquity |
| Shares outstanding | at 2018-03-31 | 15,983,273 shares | dei:EntityCommonStockSharesOutstanding |

## Business

As filed, 13,005 characters.

### Corporate History

The Company was organized under the laws of the State of Nevada on October 22, 1998 under the name Bear Lake Recreation Inc., with an initial authorized capital consisting of 50,000,000 shares of $0.001 par value common voting stock.

Our initial operations consisted of renting snowmobiles and all-terrain vehicles (ATV’s). We had also planned on organizing snowmobile rental packages, which would have included lodging at Ideal Beach Resort at Bear Lake, Utah. On or about October 1999, we abandoned the snowmobile, ATV and lodging plans. Our lack of success was attributed to entering the marketplace comprising this endeavor during a year that was the beginning of a drought cycle, resulting in below average snowfall and competitive growth from one to three self-promoting developmental properties. Our operations ceased due to depleted capital resources resulting from offering vacation packages lacking in demand.

On June 27, 2000, we entered into a licensing agreement with AlCORP, an Oregon limited liability company, to purchase the right to manufacture, use, market and sell the “NetCaddy,” a backpack style bag used to transport fishing gear. By the end of the first quarter of 2002, we had also abandoned the “Net Caddy” operations. We realized only minimal sales through our e-commerce site and 800 number infomercial advertisements. Additionally, due to the exhaustion of our capital resources, we could no longer maintain the infrastructure required for sales promotion while faced with limited consumer demand.

All computations herein take into account a one for three and one-half (1 for 3.5) share reverse split of our outstanding shares of common stock that was effective on or about October 23, 2006, and which is discussed below under this heading.

The following is a summary of material business developments since our inception through March 2018:

- 285,734 shares of our common stock were issued to our principal founder at inception for services valued at $1,000.
- Completed the offer and sale of approximately 12,868 shares of our common stock to public investors under Rule 504 of Regulation D of the Securities and Exchange Commission (the “SEC”) in March, 1999, for aggregate consideration of $45,000.
- Completed the offer and sale of approximately 94,066 shares of our common stock to persons who were “accredited investors” under Rule 506 of Regulation D in July and August, 2000, for aggregate consideration of $41,150.
- Issued our three directors and executive officers a total of approximately 428,574 (approximately 142,857 shares each, to Todd L. Albiston, Wayne Bassham and Derrick Albiston) for services valued at an aggregate consideration of $1,500 in September, 2004.
- Issued the same three directors and executive officers a total of approximately 428,574 (approximately 142,857 shares each) for services valued at an aggregate consideration of $1,500 in September, 2005.
- Our common stock was granted quotations on the OTC Bulletin Board (“OTCBB”) on or about December 31, 2005, and we were assigned a trading symbol of “BLKR.”
- On March 1, 2006, we amended Section 2.11 of our Bylaws to allow for written action to be taken without a meeting by less than all of the stockholders.
- Amended and restated our Articles of Incorporation, effective in April, 2006. The Amended and Restated Articles of Incorporation were unanimously adopted by our Board of Directors, who then also constituted our majority stockholders, collectively beneficially owning approximately 857,143 shares of our common stock or approximately 68.6% of our outstanding voting securities, as Board members and stockholders. No other votes were required or necessary to adopt the amendments to our Articles of Incorporation, and none were solicited. The following is a summary of the material changes to our Articles of Incorporation: (i) five million (5,000,000) shares of preferred stock with a par value of $0.001 per share were authorized; (ii) the minimum number of our directors was reduced to one; (iii) our Board of Directors was authorized to change our name in certain circumstances, without stockholder approval; and (iv) our Board of Directors was authorized to effect recapitalizations in the form of forward or reverse splits in certain circumstances, without a stockholder approval. We filed a Definitive Information Statement with the SEC on March 20, 2006.
- We effected a one for three and one-half (1 for 3.5) share reverse split of our outstanding shares of common stock that was effective on or about October 23, 2006, and our then OTCBB trading symbol was changed to “BLKE” on or about October 23, 2006. All share and per share amounts have been retroactively adjusted to reflect the reverse stock split.

### Description of Business

We had no material business operations from 2002 until the Acquisition and prior to the Acquisition we were a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “**Exchange Act”).**

### The Control Block Acquisition

On April 26, 2017, pursuant to a Common Stock Purchase Agreement, dated as of April 5, 2017, by and among Manchester Explorer, LP, a Delaware limited partnership (“**Manchester”**), the Company and certain persons named therein (the “**SPA”**), Manchester purchased from the Company (the “**Control Block Acquisition”**) 2,900,000 shares (the “**Control Block”**), of newly issued, restricted common stock, par value, $0.001, per share, for a purchase price of $375,000 (approximately $0.13 per share), resulting in a change in control of the Company. In connection with the Control Block Acquisition, James E. Besser was appointed president and a director and Morgan C. Frank was appointed the chief executive officer, chief financial officer, secretary, treasurer and a director of the Company and immediately following such appointments, Wayne R. Bassham resigned as director and President, Derrick M. Albiston resigned as director and Vice President, and Todd L. Albiston resigned as director, Secretary and Treasurer of the Company. For additional information regarding the Control Block Acquisition, see our Current Report on Form 8-K that was filed with the Securities and Exchange Commission (the “**SEC”**) on May 1, 2017.

### The Acquisition

On July 24, 2017, pursuant to a Reorganization and Share Exchange Agreement, by and among the Company, Paul M. DiPerna, the sole officer and director and the controlling stockholder of Quasuras Inc., a Delaware company (“**Quasuras”**), Messrs. Besser and Frank (Messrs. Besser, Frank and Mr. DiPerna, shall sometimes be collectively referred to as the “**3 Quasuras Shareholders”**) and Quasuras (the “**Acquisition Agreement”**), the Company acquired all 4,400,000 issued and outstanding shares of Quasuras’ common stock owned by the 3 Quasuras Shareholders (which represented 100% of the issued and outstanding shares of Quasuras) in exchange for 7,582,060 shares of our common stock, resulting in Quasuras becoming our wholly-owned subsidiary (the “**Acquisition”**) and Mr. DiPerna owning approximately 47% of our issued and outstanding common stock, after giving effect to the Private Placement (as defined below) and the Share Cancellation (as defined below). Simultaneously with the closing of the Acquisition and pursuant to the Acquisition Agreement, (i) Mr. Besser resigned as president and a director and Mr. Frank resigned as chief executive officer, chief financial officer, secretary, and treasurer, but remained a director of the Company, and (ii) Mr. DiPerna was appointed our chairman, chief executive officer, chief financial officer, secretary and treasurer.

In anticipation of the closing of the Acquisition, on June 27, 2017, the Company changed its name from “Bear Lake Recreation, Inc.” to “Modular Medical, Inc.” and changed its trading symbol from “BLKE” to “MODD” which symbol and name change was approved by FINRA and became effective on June 29, 2017.

The Acquisition was accounted for as a recapitalization effected by a share exchange, wherein Quasuras is considered the acquirer for accounting and financial reporting purposes.

Simultaneously with the closing of the Acquisition and as a condition thereto, we sold (the “**Private Placement”**), in a private placement an aggregate of 7,233,031 for cash and 568,182 from reissuance of previously cancelled shares of our common stock pursuant to one or more exemptions from the registration requirements of the Securities Act, at a purchase price of $0.66 per share resulting in net proceeds to us of approximately $4,731,872. Simultaneously with the Acquisition and Private Placement, the Company cancelled all 2,900,000 Control Block shares it had issued in the Control Block Acquisition (the “**Share Cancellation”**). In connection with the Private Placement, we paid $41,928 as compensation in connection with sales of our shares therein.

Unless otherwise indicated, all information contained in this Annual Report on Form 10-K with respect to periods prior to the date on which we consummated the Acquisition relates solely to Modular, without regard to the Acquisition.

For additional information regarding the Acquisition, see our Current Report on Form 8-K that was filed with the Securities and Exchange Commission (the “SEC”) on July 28, 2017.

### Effect of Existing or Probable Governmental Regulations on the Business

### Smaller Reporting Company

We are subject to the reporting requirements of Section 13 of the Exchange Act, and we are subject to the disclosure requirements of Regulation S-K of the SEC, as a “smaller reporting company.” That designation will relieve us of some of the informational requirements of Regulation S-K.

### Sarbanes-Oxley Act

We are also subject to the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence. It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members’ appointment, compensation and oversight of the work of public companies’ auditors; management assessment of our internal controls; prohibits certain insider trading during pension fund blackout periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions. Compliance with the requirements of the Sarbanes-Oxley Act will substantially increase our legal and accounting costs.

### Exchange Act Reporting Requirements

Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to our stockholders at a special or annual meeting thereof or pursuant to a written consent will require us to provide our stockholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies of this information are forwarded to our stockholders.

We are required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the Securities Exchange Commission on a regular basis, and are required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.

### Number of Total Employees and Number of Full-Time Employees

We currently employ the following four (4) employees at the Company:

- Paul DiPerna, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director (August 1, 2017 - Present);
- Marc Goldman, Consultant (August 1, 2017 - Present);
- Maria Shellhart, Bookkeeper (January 1, 2018 - Present); and
- Freeman Rose, Consultant (September 1, 2017 – Present).

### Additional Information

You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports or registration statements that we have previously filed electronically with the SEC at its Internet site at www.sec.gov. Please call the SEC at (202) 551-8090 for further information on this or other Public Reference Rooms. Our SEC reports and registration statements are also available from commercial document retrieval services, such as CCH Washington Service Bureau, whose telephone number is 1-800-955-0219.

## Properties

As filed, 471 characters.

As of March 31, 2018, we had property consisting of computers and equipment, totaling $13,259 ($15,103 less accumulated depreciation); our principal executive office address were previously located at 3 West Hill Place, Boston, MA 02110, which was provided free of charge by Manchester, and our telephone number was 617-856-8995. Our executive offices are now located at 800 West Valley Parkway, Suite 203, Escondido, CA 92025, and our telephone number is (949) 370-9062.

## Legal proceedings

As filed, 411 characters.

We are not a party to any pending legal proceeding. To the knowledge of our management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or affiliate of ours or owner of record or beneficially of more than five percent (5%) of our common stock is a party adverse to us or has a material interest adverse to us in any proceeding.

## Management's discussion and analysis

As filed, 9,900 characters.

When used in this Annual Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. Persons reviewing this Annual Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed further below under “Trends and Uncertainties,” and also include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations.

### Overview

The Company was organized under the laws of the State of Nevada on October 22, 1998 under the name Bear Lake Recreation Inc., with an initial authorized capital consisting of 50,000,000 shares of $0.001 par value common voting stock.

Our initial operations consisted of renting snowmobiles and all-terrain vehicles (ATV’s). We had also planned on organizing snowmobile rental packages, which would have included lodging at Ideal Beach Resort at Bear Lake, Utah. On or about October 1999, we abandoned the snowmobile, ATV and lodging plans. Our lack of success was attributed to entering the marketplace comprising this endeavor during a year that was the beginning of a drought cycle, resulting in below average snowfall and competitive growth from one to three self-promoting developmental properties. Our operations ceased due to depleted capital resources resulting from offering vacation packages lacking in demand.

On June 27, 2000, we entered into a licensing agreement with AlCORP, an Oregon limited liability company, to purchase the right to manufacture, use, market and sell the “NetCaddy,” a backpack style bag used to transport fishing gear. By the end of the first quarter of 2002, we had also abandoned the “Net Caddy” operations. We realized only minimal sales through our e-commerce site and 800-number infomercial advertisements. Additionally, due to the exhaustion of our capital resources, we could no longer maintain the infrastructure required for sales promotion while faced with limited consumer demand.

We had no material business operations from 2002 through the Acquisition and we were a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “**Exchange Act”**). As a shell company, we did not have material operations and had assets consisting solely of cash and cash equivalents.

On July 24, 2017, pursuant to a the Acquisition Agreement, by and among, the Company, 3 Quasuras Shareholders and Quasuras, the Company acquired all 4,400,000 shares of Quasuras’ common stock owned by the 3 Quasuras Shareholders (which represented one hundred percent (100%) of the issued and outstanding shares of Quasuras) resulting in Quasuras becoming our wholly-owned subsidiary and Mr. DiPerna owning approximately forty-seven percent (47%) of our issued and outstanding common stock, after giving effect to the Private Placement and the Share Cancellation. Simultaneously with the closing of the Acquisition and pursuant to the Acquisition Agreement, (i) Mr. Besser resigned as president and a director and Mr. Frank resigned as chief executive officer, chief financial officer, secretary, and treasurer but remained a director of the Company, and (ii) Mr. DiPerna was appointed our chairman, chief executive officer, chief financial officer, secretary and treasurer.

The Acquisition was accounted for as a recapitalization effected by a share exchange, wherein Quasuras is considered the acquirer for accounting and financial reporting purposes.

### Results of Operations – for the Fiscal Year Ended March 31, 2018 and Compared to Fiscal Year Ended March 31, 2017

For the Years Ended March 31,

|  | 2018 | 2017 |
| --- | ---: | ---: |
| Sales, net | $— | $— |
| Cost of sales | — | — |
| Gross profit | — | — |
| Gross profit margin | 0% | 0% |
| Operating expenses |  |  |
| Professional expenses | 232,961 | 17,830 |
| Research and development | 332,642 | — |
| General and administrative | 100,561 | 11,588 |
| Total operating expenses | 666,164 | 29,418 |
| Operating loss | (666,164) | (29,418) |
| Interest income | 8,518 | 962 |
| Income tax | (1,600) | (800) |
| Net loss | $(659,246) | $(29,256) |

9

#### Overview:

We reported a net loss of $659,246 and $29,256 for the fiscal years ended March 31, 2018 and 2017, respectively. The increase in our net loss from March 31, 2018 to March 31, 2017, is due to an increase in Consulting fee, Professional fee and General and Administrative Expenses.

#### Revenues:

Revenue for the fiscal years ended March 31, 2018 and 2017 was $0.

#### Operating Expenses:

Professional expenses, for the fiscal year ended March 31, 2018, increased by 1,207% or $232,961 as compared to $17,830 for 2017. The increase is attributable to an increase in consulting fees paid to outside consultants and professional services required for our required filings. The Company had no such expenses in 2017.

Research and development, for the fiscal year ended March 31, 2018, increased to $332,642 as compared to $0 for 2017. The increase in research and development expenditure is attributable to effort and expenses incurred to design and develop an innovative insulin pump to better serve the diabetic insulin delivery market. We expect to continue to incur costs related to research and development.

General and administrative expenses, for the fiscal year ended March 31, 2018, increased by 768% to $100,561 as compared to $11,588 for 2017. The increase in our general and administrative expense is attributable to (i) an increase in employee related cost of approximately $18,000, (ii) an increase in marketing and advertising expenses of approximately $13,000, (iii) an increase in rent of approximately $21,000, (iv) an increase in insurance expense of approximately $15,500, and (v) the remaining increase of approximately $45,000 is attributable to the additional cost we incurred for dues, supplies, travels and other operating expenses.

#### Interest Income:

Interest income for or the fiscal year ended March 31, 2018 and 2017 was $8,518 and $962, respectively.

### Liquidity and Capital Resources

The following summarizes our cash flows for the fiscal years ended March 31,:

|  | 2018 | 2017 |
| --- | ---: | ---: |
| Cash used in operating activities | $(791,131) | $(21,137) |
| Cash used in investing activities | (15,332) | — |
| Cash provided by financing activities | 4,711,132 | 23,521 |
| Net change in cash | $3,904,669 | $2,384 |

As a development stage enterprise, the Company does not currently have revenues to generate cash flow to cover operating expenses. The Company raised capital through the 2017 share exchange in order to finance operations.

As of March 31, 2018, we had total current assets of $4,313,480 of which $4,296,676 were cash and cash equivalents, and current liabilities of $15,471. As of March 31, 2017, we had total current assets of $392,313 and current liabilities of $29,681. As of March 31, 2018 and 2017, we had working capital of approximately of $4,298,000 and $362,600, respectively.

#### Net Cash Used In Operating Activities

We used $791,131 of cash to fund operating activities during fiscal year ended March 31, 2018, compared to $21,137 in 2017. Increased cash usage in 2018 was driven by greater operating losses deriving from development. We reported net losses of $659,246 and $29,256 for the fiscal years ended March 31, 2018 and 2017, respectively.

#### Net Cash Used In Investing Activities

We used $15,332 of cash to purchase equipment and intangible assets during the fiscal year ended March 31, 2018, compared to no cash used by investing and financing activities in the comparable prior year period.

#### Net Cash Provided By Financing Activities

We provided $4,711,132 of cash from financing activities during fiscal year ended March 31, 2018, compared to $23,521 in 2017. The subsidiary issued shares pursuant to a private placement completed simultaneously with the reverse acquisition. The cash collected in the private placement was acquired by the Company at the time of the reverse acquisition.

### Critical Accounting Policies and Estimates

#### Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“**GAAP”**) requires us 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 revenues and expenses during the reporting periods. Estimates may include those pertaining to accruals, stock-based compensation and income taxes. Actual results could materially differ from those estimates.

### Off-Balance Sheet Arrangements

As of March 31, 2018, we had not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

### Recent Accounting Pronouncements

See Note 1 in the Notes to the Financial Statements for recent accounting pronouncements.

There were various other accounting standards and interpretations recently issued, none of which are expected to have a material impact on our financial position, operations or cash flows.

## Controls and procedures

As filed, 4,856 characters.

### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period 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 in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer covered by this report, we carried out an evaluation, under the supervision and with the participation of our 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 of March 31, 2018 (the “**Evaluation Date”**). Based upon the evaluation of our disclosure controls and procedures as of the Evaluation Date, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below, which we view as an integral part of our disclosure controls and procedures.

### Management’s Annual 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 Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

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 our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and our receipts and expenditures of are being made only in accordance with authorizations of our 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.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2018. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its evaluation, our management concluded that there are material weaknesses in our internal control over financial reporting and Management has concluded that the Company’s internal controls over financial reporting are not effective as of March 31, 2018. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses relate to inadequate internal controls over financial reporting, and the lack of segregation of duties in our financial reporting process. We do not have a separately designated audit committee or independent director. To remedy these material weaknesses, we intend to engage an internal accountant to assist with financial reporting as soon as our finances will allow.

### Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting for the quarter ended March 31, 2018.

Filed Jun 29, 2018.
Source: SEC EDGAR, the filing index for accession 0001019056-18-000822. Last ingested by Listed: Nov 10, 2026, 07:32 ET. No prices; not investment advice.