Item 1.
Financial Statements
ZAP.COM CORPORATION
CONDENSED BALANCE SHEETS
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March 31,
2016
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December 31,
2015
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(Unaudited)
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ASSETS
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Current assets:
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Cash
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$
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585,711
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$
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595,514
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Prepaid expense
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5,802
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5,802
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Total assets
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$
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591,513
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$
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601,316
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable and other current liabilities
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$
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50,311
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$
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8,896
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Payable to affiliate
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13,604
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5,802
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Total liabilities
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63,915
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14,698
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Commitments and contingencies
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Stockholders’ equity:
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Common stock
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50,004
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50,004
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Additional paid in capital
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11,129,828
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11,119,717
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Accumulated deficit
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(10,652,234
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(10,583,103
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Total stockholders’ equity
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527,598
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586,618
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Total liabilities and stockholders’ equity
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$
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591,513
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$
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601,316
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See accompanying notes to condensed financial statements.
ZAP.COM CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
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Three months ended March 31,
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2016
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2015
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(Unaudited)
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Revenues
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$
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—
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$
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—
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Cost of revenues
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—
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—
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Gross profit
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—
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—
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Operating expenses:
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General and administrative
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69,131
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68,681
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Total operating expenses
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69,131
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68,681
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Operating loss
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(69,131
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(68,681
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Interest income
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—
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—
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Loss before income taxes
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(69,131
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(68,681
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Benefit from income taxes
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—
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—
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Net loss
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$
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(69,131
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$
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(68,681
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Net loss per common share – basic and diluted
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$
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—
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$
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—
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Weighted average common shares outstanding
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50,004,474
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50,004,474
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See accompanying notes to condensed financial statements.
ZAP.COM CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
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Three months ended March 31,
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2016
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2015
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(Unaudited)
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Cash flows from operating activities:
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Net loss
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$
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(69,131
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$
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(68,681
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)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Contributed capital from HRG Group, Inc. for unreimbursed management services (Note 2)
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10,111
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10,793
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Changes in operating assets and liabilities:
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Prepaid expense
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—
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(5,130
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)
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Accounts payable and other current liabilities
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41,415
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28,402
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Payable to affiliate
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7,802
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(25,217
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Net cash used in operating activities
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(9,803
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)
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(59,833
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Net decrease in cash
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(9,803
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)
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(59,833
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)
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Cash at beginning of period
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595,514
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748,913
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Cash at end of period
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$
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585,711
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$
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689,080
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See accompanying notes to condensed financial statements.
ZAP.COM CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The unaudited condensed financial statements included herein have been prepared by Zap.Com Corporation (“Zap.Com” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by US GAAP. These interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2015
filed with the SEC on March 9, 2016. The results of operations for the
three months ended March 31, 2016
are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending
December 31, 2016
.
Note 2. Related Party Transactions
Since its inception, the Company has utilized the services of the management and staff of HRG Group, Inc. (the Company’s “Principal Stockholder”), under a shared services agreement that allocated these costs on a percentage of time basis. The Company also shares office space with its Principal Stockholder under such agreement. Through
March 31, 2016
, the Principal Stockholder has waived its rights under the shared services agreement to be reimbursed for these costs. The Company recorded approximately
$10,111
and
$10,793
as contributed capital for such services for the
three months ended March 31, 2016
and
2015
, respectively. The Company believes these allocations were made on a reasonable basis; however, they do not necessarily represent the costs that would have been incurred by the Company on a stand-alone basis.
The Company’s Principal Stockholder pays certain costs of being a public company on behalf of the Company and the corresponding payables are settled periodically. At
March 31, 2016
and
December 31, 2015
, the payable to affiliate related to such transactions were
$13,604
and
$5,802
, respectively.
Note 3. Subsequent Events
On April 8, 2016, the Company entered into an Agreement of Purchase and Sale (the “Domain Sale Agreement”) with Intram Investment Co., an Ohio corporation (“Intram”). Pursuant to the Domain Sale Agreement, and subject to the terms and conditions set forth therein, Intram will purchase from the Company the rights to the Zap.Com domain name and all domain names that the Company has the rights to for
$375,000
. The closing is expected to take place on or prior to July 7, 2016 and the Company expects to recognize a gain on the sale of approximately
$375,000
upon closing of the transaction. In connection with the completion of the sale, the Company expects to change its corporate name.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Zap.Com Corporation (the “Company,” “Zap.Com,” “we,” “us,” or “our”) should be read in conjunction with our unaudited condensed financial statements included elsewhere in this report and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2015
(the “Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2016. Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements” in “Part II — Other Information” of this report. You should consider our forward-looking statements in light of our unaudited condensed financial statements, related notes, and other financial information appearing elsewhere in this report, our Form 10-K and our other filings with the SEC.
Overview
The Company was incorporated in Nevada in 1999 for the purpose of creating and operating a global network of independently owned web sites. HRG Group, Inc. (our “Principal Stockholder” or “HRG”) owns approximately 98% of our outstanding common stock. Currently, we have no business operations, other than complying with our reporting requirements under the Securities Exchange Act of 1934. We may search for assets or businesses to acquire so that we may in the future become an operating company, or we may sell assets and/or liquidate our operations.
We have broad discretion in selecting a business strategy for the Company, as part of which, we may decide to engage in one or more business combinations, or we may sell our assets and/or liquidate our operations. If we elect to pursue a business combination, we have broad discretion in identifying and selecting both the industries and the possible acquisition or business combination opportunities. We have not identified a specific industry to focus on and have no present plans, proposals, arrangements or understandings with respect to a business combination or acquisition of any specific business. There can be no assurance that we will, or will be able to, identify or successfully complete any such transactions. As of the date of this report, we are not a party to any agreements providing for a business combination or other acquisition of assets. If we enter into any such transaction, we may pay acquisition consideration in the form of cash, debt or equity securities or a combination thereof. In addition, as a part of any such transaction we may consider raising additional capital through the issuance of equity or debt securities, including the issuance of preferred stock.
On April 8, 2016, the Company entered into an Agreement of Purchase and Sale (the “Domain Sale Agreement”) with Intram Investment Co., an Ohio corporation (“Intram”), to sell the rights to the Zap.Com domain name and all domain names that the Company has the rights to for
$375,000
. See Note 3, Subsequent Events to the accompanying unaudited condensed financial statements for additional information.
Results of Operations
For the
three months ended March 31, 2016
and
2015
, our operations consisted of the following:
Revenues.
We had no revenues for the
three months ended March 31, 2016
and
2015
, and we do not presently have any revenue-generating business.
Cost of Revenues
.
We had no cost of revenues for the
three months ended March 31, 2016
and
2015
.
General and Administrative Expenses
.
General and administrative expenses consist primarily of legal and accounting professional services, printing and filing costs, expenses allocated for services by our Principal Stockholder under a shared services agreement, and various other costs. General and administrative expenses
increased
by
$450
to
$69,131
for the
three months ended March 31, 2016
from
$68,681
for the
three months ended March 31, 2015
.
Liquidity and Capital Resources
We have not generated any significant revenue since our inception. As a result, our primary source of liquidity has been from our initial capitalization. At
March 31, 2016
, our cash balance was
$585,711
.
Since our inception, we have utilized services of the management and staff and occupied office space of our Principal Stockholder under a shared services agreement that allocated these costs. Our Principal Stockholder has waived its rights under the shared services agreement to be reimbursed these costs through
March 31, 2016
. For the
three months ended March 31, 2016
and
2015
, we recorded approximately
$10,111
and
$10,793
, respectively, as contributed capital for these services.
We believe that we have sufficient resources to satisfy our existing liabilities and our anticipated operating expenses for the next twelve months. Until such time as we actively pursue a business combination, asset acquisition or liquidate our operations, we expect these expenses to consist mainly of general and administrative expenses incurred in connection with maintaining our status as a public reporting company. We have no commitments for capital expenditures and foresee none, except for possible future business combinations or asset acquisitions. In order to effect a business combination or asset acquisition, however, we may need
additional financing. There is no assurance that any such financing will be available or available on terms favorable or acceptable to us.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements at
March 31, 2016
that have or are reasonably likely to have a current or future material effect on our financial position, results of operations or cash flows.
Summary of Cash Flows
Cash used in operating activities was
$9,803
for the
three months ended March 31, 2016
compared to
$59,833
for the
three months ended March 31, 2015
. The
decrease
in cash used in operating activities was primarily due to timing of payments on outstanding balances due to affiliates and third parties during the
three months ended March 31, 2016
as compared to the
three months ended March 31, 2015
.
We had no cash flows from financing or investing activities for the
three months ended March 31, 2016
and
2015
.
Recent Accounting Pronouncements Not Yet Adopted
As of the date of this report, there are no recent accounting pronouncements that have not yet been adopted that we believe would have a material impact on our financial statements.
Critical Accounting Policies and Estimates
As of
March 31, 2016
, our critical accounting policies and estimates have not changed materially from those set forth in our
2015
Form 10-K.
Contractual Obligations
We do not have any long-term debt obligations, capital leases obligations, operating lease obligations or purchase obligations at
March 31, 2016
.
Item 4.
Controls and Procedures
Evaluation of disclosure controls and procedures
An evaluation was performed under the supervision of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that, as of
March 31, 2016
, the Company’s disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.
Changes in Internal Controls Over Financial Reporting
An evaluation was performed under the supervision of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of whether any change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended
March 31, 2016
. Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that no significant changes in the Company’s internal controls over financial reporting occurred during the quarter ended
March 31, 2016
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that the Company’s disclosure controls and procedures or the Company’s internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.