Item 4. Controls and Procedures
ITEM 4. CONTROLS AND PROCEDURES
Management's Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, 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, (the “Exchange Act”)), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2023 have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed in the 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 that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As previously disclosed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, management identified a material weakness in our internal control over financial reporting due to the fact that we did not: (1) design and maintain effective information technology general controls in the areas of user access, and segregation of duties for one of the information technology systems that supports the Company’s financial reporting over inventory (work in process and finished goods) in costing; and (ii) identify and test control to ensure the reliability of the costing of inventory (work in process and finished goods). Our management is in the process of addressing the material weakness.
Remedial Measures
Our management, with oversight from our Audit Committee, has developed, designed and implemented remediation plans in response to the identified material weakness described above. We have adopted additional measures to further improve information technology general controls in the areas of user access, including implementation of automated control to test calculation of standard cost. We also modified our procedures to ensure segregation of duties for our system that supports financial reporting over inventory (work in process and finished goods) in costing, and to identify and test control to ensure reliability of costing of inventory (work in process and finished goods). These additional efforts are required to remediate the materiel weakness.
Our management is committed to maintaining a strong control environment throughout the Company. Although management believes that the above efforts have improved our internal control over financial reporting and is in the process of remediating the above identified material weakness, we intend to continue to implement new processes and controls when needed to continue strengthening our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
Other than the remedial measures described above, there have not been any significant changes in our internal control over financial reporting during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitation on Effectiveness of Controls
While our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance that their respective objectives will be met, we do not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors and all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met.
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PART II. OTHER INFORMATION
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