What changed in this filing

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Item 4. Controls and Procedures

2024-05-20 compared with 2023-11-14 · 62 added, 25 removed, 12 unchanged (88% of the section changed)

2 unchanged sentences

Our management is responsible

for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed

in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported

within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such

information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate,

to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures”

in Rule 15d-15(e) under the Exchange Act.

In designing and evaluating the disclosure controls and procedures, management recognized that

any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired

control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible

controls and procedures.

for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be

no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

All internal control systems, no matter how well designed, have inherent limitations.

Because of its inherent limitations, internal control

over financial reporting may not prevent or detect misstatements.

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.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect

to financial statement preparation and presentation.

During the period covered

1 unchanged sentence

Officer and Chief Financial Officer, of the effectiveness of the design and operation of our internal controls over financial reporting.

Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, we do not

have sufficient internal controls over financial reporting and procedures to ensure that all the information required to be disclosed

in our Exchange Act reports was recorded, processed, summarized and reported on a timely basis.

We identified the following

material weakness which existed as of December 31, 2022:

Amiga is a small business and represents less than 10.0% of our 2024 revenues and 10.7% of our 2024 net loss.

There was no material change

to its internal control over financial reporting due to the acquisition.

Based upon our evaluation, our Chief Executive Officer and Chief

Financial Officer concluded that, identified as of March 31, 2024, we do not have sufficient internal controls over financial reporting

and procedures to ensure that all the information required to be disclosed in our Exchange Act reports was recorded, processed, summarized

and reported on a timely basis.

The following material weakness

existed as of December 31, 2023:

Material weakness:

The Company has a material weakness that was previously identified, that has not yet been completely remediated.

The Company currently does not have sufficient controls in place to ensure that all inventory is appropriately tracked and recorded on a timely basis, given the lack of an automated tracking system and the manual nature of its current processes and controls surrounding inventory.

The Company performs manual processes during the year to track and control inventory transactions, apply labor and overheads to inventory and to perform a wall-to-wall physical inventory at the end of the year to confirm the ending inventory balance and valuation.

While these processes provide good results in determining inventory and cost of sales transactions, as we grow, it has become a very time-consuming process and could impact our ability to submit timely reporting.

While manual controls improved significantly in 2022 and 2023 at our San Diego location, we determined we had similar issues with manufacturing systems at our Chicago facility that was added in 2022 as a result of the All Cell acquisition.

We believe an enterprise resource planning (ERP) system will provide automated processes, better controls, and improved management tools to analyze and plan production while assisting in the avoidance of over-purchasing or inventory shortages.

This includes a manual process for completing an allocation of labor and overhead to our products on a timely basis.

The Company implemented a NetSuite ERP system in Q4 2023 which we believe will remedy this deficiency.

The NetSuite ERP system is continually undergoing additional configuration to effectively remediate the internal control weakness when fully implemented.

During Q4 2023, the Company implemented NetSuite

ERP system to automate operations and accounting for the San Diego and Chicago locations.

We did not implement program change management

and user access controls to ensure that:

IT program and data changes affecting the Company’s financial IT applications & underlying accounting records are identified,

tested, authorized, and implemented appropriately, and

Appropriate segregation of duties that would adequately restrict user access and ensure adequate review of transactions.

Because we are a small company, many employees

have multiple job responsibilities, and during the implementation in Q4, access was allowed for employees to access necessary tasks.

As we move forward into 2024, we will assign access to ensure the proper segregation of duties.

Additionally, we need to ensure the employees

are adequately trained and able to resolve issues timely.

The Company needs to establish appropriate procedures for change management

to ensure changes to the system are formally approved, properly restricted to appropriate personnel, and adequately tested.

In our review, we noted that the Company did not implement adequate controls relating to documentation of the review and approval of reconciliations and other schedules prepared internally to be included or disclosed in the financial statements.

Many of our reports and reconciliations are performed in Excel spreadsheets, and we did not adequately validate the segregation of duties between the preparer and the approver with a signature and time stamp.

NetSuite has many robust internal control features that can be configured and utilized to ensure workflow approvals are adhered to and integrated into documentation.

Since these controls have

1 unchanged sentence

based on the criteria established in the “Internal Integrated Framework” issued by COSO in 2013 and as a result, we did not

maintain effective internal control over financial reporting as of September 30, 2023.

maintain effective internal control over financial reporting as of March 31, 2024.

Changes in Internal Control Over Financial Reporting

During the nine months ended

September 30, 2023, we began to implement stronger processes related to ordering, counting, warehousing, valuing and transacting our inventory

at our energy storage facility in Broadview, IL.

We also are completing the process of implementing a new company-wide enterprise resource

planning (ERP) system to replace our existing QuickBooks system, which will be effective in Q3 2023.

The Company is continuing

to actively work to remediate the material weaknesses described above, including the need for additional remediation steps and implementing

additional measures to remediate the underlying causes that give rise to the material weaknesses.

During the three months ended March

31, 2024, the Company has taken various actions to strengthen our internal control over financial reporting, including:

· Reviewing access in NetSuite ERP to ensure the proper segregation of duties and training courses to ensure

the employees are adequately trained and able to resolve issues timely.

· Implementing stronger processes related to ordering, counting, warehousing, valuing and transacting our

inventory in NetSuite ERP.

· Increasing the adequacy of staffing levels and expertise with the requisite technical knowledge and skills

to support further enhancement on the controls and procedures surrounding documentation of review and formalization of reconciliations,

accounting policies and controls.

· Implementing a segregation of duties between the preparer and the approver of reconciliation and supporting

schedules which included hiring additional staff.

The material weaknesses will be considered remediated

when management concludes that, through testing, the applicable remedial controls are designed, implemented and operating effectively.

As management continues to evaluate and improve disclosure controls and procedures and internal control over financial reporting, the

Company may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances

not to complete, certain of the remediation measures identified.

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.

What changed 10-Q

Item 4. Controls and Procedures