Item 4. Controls and Procedures
Item 4. Controls and Procedures
Evaluation of Disclosure Controls
and Procedures
Management is responsible
for establishing and maintaining adequate internal controls over financial reporting. Internal controls over financial reporting, as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to those policies and procedures and processes that pertain to the maintenance
of records that accurately and fairly reflect transactions with respect to our assets; provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and
that receipts and expenditures are made only in accordance with authorization of our management; and provide reasonable assurance regarding
the prevention and timely detection of unauthorized transactions with respect to our assets that could have a material effect on our financial
statements.
Because of inherent limitation,
internal control over financial reporting may not prevent or detect misstatements. 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 relies upon
the criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) in designing a system intended to meet the needs of our Company and provide reasonable assurance for its assessment.
Based on an evaluation of our internal controls over financial reporting
for the nine months ended September 30, 2023, our Chief Executive Officer and Chief Financial Officer concluded that our internal controls
over financial reporting were not effective as of September 30, 2023. In our 2022 Form 10-K, we reported certain material weaknesses in
our internal controls over financial reporting as of December 31, 2022. During the nine months of 2023, we have established written controls
and operating procedures intended to address the issues reported related to determining the appropriate reserves to be taken with respect
to our inventory and management’s review controls over the income tax provision in the notes to our financial statements; however,
these material weaknesses noted will only be deemed to have been remediated after the new controls and procedures have been in place for
a sufficient period of time and management has concluded through appropriate testing that the controls are operating effectively. We are
in the process of remediating the material weakness in the design flaw related to a granting access to our IT system. We believe that
this remediation will be completed late in the fourth quarter of 2023 or in the first quarter of 2024.
Changes in Internal Control
over Financial Reporting
Except as discussed above,
there have not been any 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 our most recently completed fiscal quarter which is the subject of this report that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.