# Eva Live Inc: Form 10-Q for the period ended Sep 30, 2023

- Company: [Eva Live Inc](/companies/goai.md) (CIK 1983736)
- Form: 10-Q
- Filed: 2023-11-13
- Accepted by EDGAR: Nov 13, 2023, 09:30 ET
- Period: 2023-09-30
- Accession: 0001493152-23-040360
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1983736/000149315223040360/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1983736/000149315223040360/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $1.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $3.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $490.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $862.4k | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $490.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $862.4k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.00 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.00 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 115,847,349 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 115,847,349 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $516.8k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-09-30 | $555.3k | us-gaap:Cash |
| Current assets | at 2023-09-30 | $1.5m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $3.5m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $2.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $2.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $1.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 25,207 characters.

***This Quarterly Report Form 10-Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.***

### MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this prospectus, including statements regarding the anticipated development and expansion of our business, our intent, belief, or current expectations, primarily concerning the future operating performance of the Company and the products we expect to offer, and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements. Future filings with the Securities and Exchange Commission, future press releases, and future oral or written statements made by us or with our approval, which is not statements of historical fact, may contain forward-looking statements because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

All forward-looking statements speak only as of the date they are made. We undertake no obligation to update such statements to reflect events or circumstances that exist after the date on which they are made.

### COMPANY OVERVIEW

Eva Live Inc. (the “Company”) was incorporated under the laws of the State of Nevada on August 27, 2002, as International Pit Boss Gaming, Inc. On October 1, 2002, the Company merged with Pro Roads Systems, Inc. (a Florida corporation), a public shell company traded on the pink sheets. Pro Roads Systems, Inc. had no operations before the merger. The purpose of the merger was to change the Company’s domicile from Florida to Nevada. From its inception to 2006, the Company designed and developed software for the gaming industry. The Company changed its name on February 14, 2006, to Logo Industries Corporation and, on November 18, 2008, to Malwin Ventures Inc. On February 11, 2014, the Company announced negotiations with Impact Future Media LLC, and their President/Founder, Francois Garcia, acquired 100% of Impact Future Media LLC and its media and entertainment assets. The Company announced the closing of this transaction on March 25, 2014. From March 2014 to September 28, 2021, the Company was involved in the entertainment, publishing, and interactive industry.

The Company’s year-end is December 31.

On September 9, 2021, the Company completed a reverse split in the amount of 1 for 150, Changed the Company’s name to Eva Live Inc., Changed the Company’s trading Symbol from MLWN to GOAI, and executed an Acquisition Agreement resulting in a change of control of the Issuer. On September 10, 2021, the Financial Industry Regulatory Authority (“FINRA”) announced the effectiveness of a change in the Company’s name from “Malwin Ventures, Inc.” to “Eva Live, Inc.” (the “Name Change”) and a change in the Company’s ticker symbol from “MLWN” to the new trading symbol “GOAI” (the “Symbol Change”). Trading under the new ticker symbol began at market opening on July 11, 2021. The current shareholders do not require action from current shareholders concerning the change in the trading symbol. The Company’s CUSIP also changes to 98892100.

### Current Operations

As of September 28, 2021, the Company’s vision is to build the world’s leading digital media platform to deliver measurable business outcomes at a scale for regional and global brands, agencies, and retailers across different marketing goals. Our system continually learns to achieve trusted and impactful digital advertising solutions, eliminating ad fraud, lag, and error to produce unmatched digital advertising optimization. Effective September 28, 2021, David Boulette is the Company’s Chief Executive Officer and Director. At present, the Company currently has four directors. The one non-executive director is Terry Fields. The three executive directors are David Boulette, Phil Aspin, and Daryl Walser.

Eva Live is a technology company that has developed an automated and intelligent advertiser campaign management platform, Eva Platform. Our Platform enables advertisers (‘customers, clients’) to buy advertising space on several digital channels to reach their desired audience. Our technology intends to address the needs of markets where high-volume advertisers want automated advertising purchases to have high conversion rates. We focus on data-driven marketing and cross-channel measurement, critical to businesses looking to optimize their marketing budget and reach audiences across all their integrated advertising efforts.

We operate at the junction of digital marketing and media monetization. We enable market awareness of companies and brands by providing best-in-class digital marketing and monetization services on the Internet. Our typical customers are advertising agencies (classified under SIC7319) and businesses in various industries seeking to market their products and services using our platform, including media companies, financial institutions, and other retail entities. Most of our customers are from North America, mainly the US and Canada. For the fiscal year ending December 31, 2022, we had seven (7) customers, primarily from North America, compared to three (3) customers for the fiscal year ending December 31, 2021. The top three customers represent over 92% of revenue for the fiscal year ending December 31, 2022, and 2021. Our company’s financial health is highly dependent on these top customers. If any of them were to significantly reduce their spending or cease doing business with your company, it could have a major impact on your revenue and overall financial health. Such customers advertise with media through us and engage in media buying services such as online traffic from the Eva Platform. We also deal with businesses (as described under NAICS 541810) that utilize our in-house digital marketing capabilities, including advice, creative services, account management, production of advertising material, media planning, and buying (i.e., placing advertising).

We execute our business through Eva Platform based on Artificial Intelligence, or AI, to match advertising campaigns to specific ad spots one at a time. Our system creates conversion mapping tables that allow us to increase conversion rates by analyzing those trends with optimized historical conversion rates and further capitalizing on and improving those rates. We leverage “big data,” an accumulation of data that is too large and complex for processing by traditional database management tools. Since more companies are attempting to leverage big data to make strategic business decisions, we have built automated tools that analyze the data and feed the relevant information into our decision logic. We have designed our solution to optimize brand campaigns to create awareness and direct response campaigns with a fixed conversion point.

The Company also owns the Eva XML Platform, which buys traffic from various sources and sells that traffic to landing pages that display advertising via XML feeds. A price discrepancy exists between buying traffic on display and native platforms for specific keywords in an ad campaign and the XML search feeds. The Eval XML Platform manages the entire ad buying/selling process by integrating into Google, Microsoft, Taboola, Revcontent, Gemini, and Facebook. As a result, we can create thousands of ads with a push of a button. The Eva XML Platform manages the spending depending on the performance of keywords in the ad campaign to maximize the arbitrage revenue.

### Recent Significant Transaction – EvaMedia Corp. Acquisition

On September 28, 2021 (the ‘Acquisition Date’), the Company merged (‘Acquisition’) into EvaMedia Corp. (‘EvaMedia). Upon completion of the Acquisition, the Company acquired all issued and outstanding shares of capital stock of EvaMedia. As a result, the Company issued 110,192,177 shares of the Company’s common stock to shareholders of EvaMedia, and immediately following the Acquisition, 111,169,525 shares of common stock were issued and outstanding. As a result, EvaMedia’s shareholders control 99.12% of issued and outstanding shares of the Company on a fully diluted basis. Following the Acquisition, David Boulette of EvaMedia became the company’s CEO, director, and controlling shareholder. He appointed two additional board members from EvaMedia, Phil Aspin and Darly Walser. Terry Fields remained the only board member from the Company.

We have accounted the Acquisition as a reverse acquisition under the acquisition method of accounting per ASC 805, with EvaMedia treated as the accounting acquirer and the Company treated as the “acquired” company for financial reporting purposes. We determine EvaMedia an accounting acquirer based on the following facts: (i) after the reverse merger, former shareholders of EvaMedia held a majority of the voting interest of the combined company; (ii) former Board of Directors of EvaMedia possess majority control of the Board of Directors of the combined company; (iii) members of the management of EvaMedia are responsible for the management of the combined company. As such, we have treated the financial statements of EvaMedia as the historical financial statements of the combined company, and (iv) EvaMedia’s relative size measured in assets and revenues is significantly larger than that of the Company.

We have identified the Company as the legal acquirer, as it is the entity that issued securities. Comparatively, we have identified EvaMedia as the legal acquiree, the entity whose equity interests are acquired.

We consider the Acquisition a reverse acquisition; therefore, the purchase consideration is the Company’s fair value as of September 28, 2021. The number of shares issued and outstanding for the Company just before the Acquisition Date was 977,348, with a market price of $2.000 quoted on the OTC Bulletin Board under the trading symbol GOAI. We estimated the purchase price and the book value or net financial liability of the Company to be $1,954,697 and $55,909. As a result, we recorded Goodwill as the difference between the purchase price and book value, $2,010,606. The Company carried out the Goodwill Impairment Analysis as of December 31, 2021, where the carrying value of the Goodwill as of December 31, 2021, is $2,010,606. The fair market value of the implied Goodwill is approximately $74,945,552, which is higher than the carrying value, and thus, the Company did not record any impairment as of December 31, 2021.

### AdFlare Acquisition

On July 13, 2022, the Company entered into a Share Exchange Agreement (“AdFlare SEA”) with AdFlare Limited, a company duly formed under the laws of Ireland (Reg. Number: 714192) (“AdFlare”), and the shareholders of AdFlare, Phil Aspin, an individual and Stephen Adds, an individual (collectively, the “Shareholders”) whereby the Company acquired One Hundred (100%) percent of the issued and outstanding shares of AdFlare in exchange for 500,000 shares of the Company’s restricted common stock valued at $1,500,000 using the discounted cash flow methodology. Mr. Phil Aspin, co-founder of AdFlare, has been a member of the Company’s Board of Directors since September 28, 2021. The Company carried out the Goodwill Impairment Analysis as of December 31, 2022, where the carrying value of the Goodwill as of December 31, 2022, is $1,500,000. The fair market value of the implied Goodwill is approximately $0, which is less than the carrying value, and thus, the impairment as of December 31, 2022, is $1,500,000.

AdFlare, a wholly-owned subsidiary of the Company, is a leader in the specialized field of “Header Bidding,” with a deep contextual understanding of an array of ad technologies spanning search, display, and video across mobile and desktop, providing solutions to help all publishers drive revenue. Header bidding, also known as advance or pre-bidding, is a technology wherein publishers simultaneously offer their inventory to multiple ad exchanges, advertisers, and agencies. The idea is that by letting various buyers bid on the same inventory at the same time, in real-time, there’s more competition driving up the auction pressure and a chance to serve each impression at a higher Cost Per Mille rate (“CPM rate”), meaning capturing additional revenue. AdFlare has a track record of delivering over 1 billion ad impressions a month and increasing Google AdX over Google AdSense CPM by over 30%, with an average fill rate of 99.9% in the US market.

### Financial Conditions at September 30, 2023, and December 31, 2022

At September 30, 2023, and December 31, 2022, the Company had $555,303 and $38,506 cash to execute its business plan. At September 30, 2023, and December 31, 2022, the Company had accumulated a deficit of $17,269,186 and $18,131,587. The Company had a working capital deficit of $466,600 and $1,492,334 on September 30, 2023, and December 31, 2022.

### RESULTS OF OPERATIONS

### Three Months Ending From September 30, 2023 and 2022

At present, we generate all revenues from the principal-based model. The Company generated revenues of $1,699,173 and $209,990 for the three months ended September 30, 2023, and 2022. The rise in revenues was primarily driven by a growth in the Company’s customer base, expanding from four (4) to ten (10) customers over the period ending September 30 for the years 2022 and 2023. Additionally, this increase in revenue was further bolstered by the larger size of the contracts secured during the three months concluding on September 30, 2023. The Company incurred a net income and net loss of $489,989 and $299,488 in the three months ended September 30, 2023, and 2022.

During the three months ended September 30, 2023, and 2022, the Company incurred general & administrative costs (“G and A”) of $175,740 and $305,730, representing 10.34% and 145.59% of the respective quarterly revenue. During the three months ended September 30, 2023, and 2022, the Company spent $979,000 and $149,304 in buying media traffic, representing 57.62% and 173.80% of respective quarterly revenue. During the three months ended September 30, 2023, and 2022, the amortization and depreciation expenses were $54,444 and $54,444.

During the three months ended September 30, 2023, and 2022, the Company rent expenses were $687 and $687.

### Nine Months Ending From September 30, 2023 and 2022

At present, we generate all revenues from the principal-based model. The Company generated revenues of $3,124,652 and $1,049,135 for the nine months ended September 30, 2023, and 2022. The rise in revenues was primarily driven by a growth in the Company’s customer base, expanding from four (4) to sixteen (16) customers over the period ending September 30 for the years 2022 and 2023. Additionally, this increase in revenue was further bolstered by the larger size of the contracts secured during the nine months concluding on September 30, 2023. The Company incurred a net income of $862,401 and a net loss of $1,940,261 in the nine months ended September 30, 2023, and 2022.

During the nine months ended September 30, 2023, and 2022, the Company incurred general & administrative costs (“G and A”) of $518,746 and $1,440,029, representing 16.60% and 166.40% of the respective period revenues. During the nine months ended September 30, 2023, and 2022, the Company spent $1,580,172 and $931,000 in buying media traffic, representing 50.57% and 102.97% of the revenue. During the nine months ended September 30, 2023, and 2022, the amortization and depreciation expenses were $163,333 and $163,333.

During the nine months ended September 30, 2023, and 2022, the Company rent expenses were $2,061 and $2,061.

### Fiscal Year Ending From December 31, 2022, and 2021

The Company has consolidated the income statements for the fiscal year ending December 31, 2022, and 2021. We derived all revenues from the principal-based model for the fiscal year ending December 31, 2022, and 2021. The Company generated revenues of $1,350,941 and $2,458,273 for the fiscal year ended December 31, 2022, and 2021. The Company incurred a net loss of $3,592,907 and $9,779,964 during the fiscal year ended December 31, 2022 and 2021. The increase in loss for the fiscal year ended December 31, 2021, was mainly due to high share-based expenses for EvaMedia’s management and consultants.

During the fiscal year ended December 31, 2022, and 2021, the Company incurred general & administrative costs (“G and A”) of $2,120,352 and $ 10,103,613. In 2021, G and A costs were $10,103,613, presumably including a significant share-based compensation expense related to the consulting services. During the fiscal year ended December 31, 2022, and 2021, the Company spent $1,105,718 and $1,835,088 on buying media traffic. During the fiscal year ended December 31, 2022, and 2021, the media traffic expenses were 81.85% and 135.84% of the revenue. In the fiscal year ended December 31, 2022, the Company carried out several test campaigns to streamline and optimize its platform; as a result, the media expenses were higher compared to such expenses for the fiscal year ending December 31, 2021. During the fiscal year ended December 31, 2022, and 2021, the amortization and depreciation expenses were $217,778 and $217,778.

For the fiscal year ended December 31, 2022, and 2021, the office’s rent payment was $2,748 and $2,748, included in the General and administrative expenses.

### LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2023, and December 31, 2022, the Company had $555,303 and 38,506 cash to execute its business plan. At September 30, 2023, and December 31, 2022, the Company had accumulated a deficit of $17,269,186 and $18,131,587. The Company had a working capital deficit of $466,600 and $1,492,334 on September 30, 2023, and December 31, 2022.

Since its inception, the Company has sustained losses and negative cash flows from operations. The Management believes that cash on hand may not be sufficient for the Company to meet working capital and corporate development needs as they become due in the ordinary course of business for twelve (12) months following September 30, 2023. The Company had not generated significant revenues or cash flow from operations in the past and for the three months ended September 30, 2023. The Company continues to experience negative cash flows from operations and the ongoing requirement for substantial additional capital investment to develop its financial technologies. We expect to conduct the planned operations for twelve months using currently available capital resources. The Management anticipates raising significant additional capital to accomplish its growth plan over twelve (12) months. We do not have any plans or specific agreements for new funding sources. The Management expects to seek to obtain additional funding through private equity or public markets. However, there can be no assurance about the availability or terms such as financing and capital might be available.

In the next twelve months, the Company will continue to invest in sales, marketing, product support, development of technology solutions, and enhancement of existing technology to serve our customers. We expect capital expenditure to increase to up to $250,000 in the next twelve months to support the growth, which mainly includes software development, acquisition of complementary software, and purchasing of computers and servers. In addition, the Company estimates the additional expenditure needed to be $250,000, which provides $100,000 and $1500,000 for sales & marketing and working capital, respectively.

For the next six to nine months, we expect existing cash on hand, cash flows from operations, and access to funding to be sufficient to fund our operating activities and other cash commitments, such as related party payments and material capital expenditures. However, we may need additional funds to achieve sustainable sales where ongoing operations can be funded out of revenues. There is no assurance that any additional financing will be available or, if available, on terms that will be acceptable to us.

### GOING CONCERN CONSIDERATION

We have yet to generate significant revenues and cash flow from operations to cover our ongoing expenses. As of September 30, 2023, the Company had an accumulated deficit of $17,269,186. Our independent auditors included an explanatory paragraph in their report on the audited financial statements for the fiscal year ended December 31, 2022, and 2021, regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. Our financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Management has considered various factors in evaluating the Company’s sustainability and the ability to manage obligations due within a year. Management has considered general economic conditions, key industry metrics, operating results, capital expenditures, commitments, future obligations, and liquidity. If there is a delay in generating significant revenues by December 31, 2023, the Company will require capital infusion from new and existing investors, streamlining operating costs, and evaluating new business strategies to enhance cash flow from operations.

### CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

We have based our management’s discussion and analysis of our financial condition and results of operations on our financial statements, which we have prepared following the U.S. generally accepted accounting principles. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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. Our actual results could differ from these estimates, and such differences could be material and uncertain in the current economic environment due to COVID-19.

In more detail, we have described significant accounting policies in Note 2 of our annual financial statements included in our 10-K for the fiscal year ended December 31, 2022, filed with the SEC on October 27, 2023. We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as appropriate based on changing conditions.

### JOBS ACT ACCOUNTING ELECTION

We are an “*emerging growth company,”* as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies. As an emerging growth company, we have applied for an exemption; as a result, the Company may delay the adoption of certain accounting standards until the standards would otherwise apply to private companies.

### OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation S-B. We did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes.

### RECENT ACCOUNTING PRONOUNCEMENTS

The amendments in the ASU are effective for fiscal years beginning after January 1, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. We have adopted this ASU as of January 1, 2020, for ASC 606, Revenue Recognition and Amended ASU 2016-02, Leases (Topic 840). The ASU is currently not expected to have a material impact on our consolidated financial statements. While we have described significant accounting policies in more details in Note 2 of our annual financial statements included in our S-1/A for the fiscal year ended December 31, 2022, filed with the SEC on October 27, 2023, we believe the accounting policies as described in Note 2 to be critical to the judgments and estimates used in the preparation of our financial statements.

## Controls and procedures

As filed, 5,272 characters.

### Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report.

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under 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 in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

### Management’s Report on Internal Controls over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a- 15(f) under the Securities Exchange Act, as amended. Management, with the participation of the Chief Executive Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023. In making this assessment, management used the criteria set forth by the committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

(3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our consolidated financial statements. Also, projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2023. Based on our assessments, management determined that we did not maintain effective internal control over financial reporting as of September 30, 2023, due to the material weakness in our internal controls due to inadequate segregation of duties within account processes due to limited personnel and insufficient written policies and procedures for accounting, IT, and financial reporting and record keeping.

Management intends to implement remediation steps to improve our internal controls due to inadequate segregation of duties within account processes due to limited personnel and insufficient written policies and procedures for accounting, IT, and financial reporting and record keeping. We plan to further improve this process by enhancing the size and composition of our board upon the closing of the business identifying third-party professionals with whom to consult regarding complex accounting applications, and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals and implemented additional layers of reviews in the internal controls and financial reporting process.

This Report does not include an attestation report of our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the three months Ended September 30, 2023, and 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 150 characters.

In accordance with the requirements of Form 10-Q, the Company, as a smaller reporting company, is not required to make the disclosure under this item.

Filed Nov 13, 2023.
Source: SEC EDGAR, the filing index for accession 0001493152-23-040360. Last ingested by Listed: Oct 29, 2026, 16:31 ET. No prices; not investment advice.