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Our management, with the participation of our principal executive officers and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q.
−Removed: Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports 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 that such information is accumulated and communicated to our management, including our
−Removed: principal executive officers and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.
−Removed: Based on this evaluation, our principal executive officers and principal financial officer concluded that our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting, as further described below:
−Removed: We concluded that certain material weaknesses in our internal control over financial reporting were still present.
−Removed: The material weaknesses present were as follows:
+Added: Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports 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 that such information is accumulated and communicated to our management, including our principal executive officers and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure .
+Added: Based on this evaluation, our principal executive officers and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in our internal control over financial reporting, as further described below:
+Added: We concluded that certain material weaknesses in our internal control over financial reporting are still present as of June 30, 2021.
+Added: The material weaknesses present are as follows:
We did not maintain an effective control environment as we did not maintain a sufficient complement of accounting and financial reporting resources commensurate with our financial reporting requirements.
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Specifically, we did not design and implement a sufficient level of formal accounting policies and procedures that define how transactions across the business cycles should be initiated, recorded, processed and reported and appropriately authorized and approved.
−Removed: These control deficiencies did not result in errors that were material to our annual financial statements.
−Removed: However, these control deficiencies could result in a misstatement in our accounts or disclosures that would result in a material misstatement to the annual financial statements that would not be prevented or detected.
+Added: These control deficiencies did not result in errors that were material to our annual or interim financial statements.
+Added: However, these control deficiencies could result in a misstatement in our accounts or disclosures that would result in a material misstatement to the financial statements that would not be prevented or detected.
Accordingly, we determined that these control deficiencies constitute material weaknesses.
We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses.
−Removed: As of March 31, 2021, we have completed the following remedial actions:
−Removed: hired additional full-time accounting resources with appropriate levels of accounting knowledge and experience, including but not limited to a Chief Financial Officer in the second half of 2018, a Vice President of Accounting, Vice President of FP&A and Director of Revenue in the first half of 2019;
+Added: As of June 30, 2021, we have completed the following remedial actions:
+Added: hired additional full-time accounting resources with appropriate levels of accounting knowledge and experience, including but not limited to a Chief Financial Officer in the second half of 2018, and the following resources who all have significant public company experience:
+Added: a Vice President of Accounting, Vice President of FP&A, Senior
+Added: Director of Revenue in the first half of 2019 , Director of SEC Reporting with Big Four Accounting experience and a Corporate Controller in the second half of 2020, and a Senior Revenue Man a ger in the first quarter of 2021 ;
reallocated responsibilities across the accounting organization to ensure that the appropriate level of knowledge and experience is applied based on risk and complexity of transactions and tasks under review;
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designed and implemented controls and continued to refine processes to validate all terms of the revenue transactions were properly considered when determining revenue recognition and that all revenue transactions were subject to thorough review from individuals with the appropriate mix of expertise and oversight to ensure accurate presentation;
+Added: increased the number of Board Directors on our Audit Committee to three independent Directors late 2020;
+Added: engaged a Big Four public accounting firm to assist us in the creation of, and ultimately serve as, in an internal audit function, including the establishment of an internal audit charter and assessment, documentation, design and implementation of control activities related to internal controls in the second quarter of 2021.
We have made significant progress towards remediating the material weaknesses and will continue to review, revise, and improve the effectiveness of our internal controls as appropriate Although we have made significant enhancements to our control procedures, these material weaknesses will not be considered remediated until our controls are operational for a sufficient period of time, tested, and management concludes that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
−Removed: During the first quarter, we have designed and implemented controls related to the formalization of our accounting policies and procedures and financial reporting, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
−Removed: Other than these changes, there have been no other changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
+Added: The second quarter remediation activity described above is a change in internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our management, including our principal executive officers and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud.
−Removed: A control system, no
−Removed: matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
+Added: A control system, no matter how well designed 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.
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Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
−Removed: PART II – OTHE R INFORMATION
+Added: PART II – OTHER INFORMATION
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.