What changed in this filing

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Item 4. Controls and Procedures

2023-11-29 compared with 2023-08-10 · 29 added, 5 removed, 13 unchanged (72% of the section changed)

Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness, as of June 30, 2023, 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.

Based upon such evaluation, our chief executive officer and principal financial and accounting officer have concluded that, as of June 30, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to disclose in our filings with the Securities and Exchange Commission, or SEC, under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our chief executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness, as of September 30, 2023, 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.

Based upon such evaluation, our chief executive officer and principal financial and accounting officer have concluded that our disclosure controls and procedures to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures were not effective at the reasonable assurance level due to the material weakness in internal control over financial reporting.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented on a timely basis.

Management has identified material weaknesses in our internal control over financial reporting associated with the design of our controls over the accounting treatment of contractually required deposits and the accounting treatment for complex non-routine equity transactions.

Specifically, the Company did not effectively design controls to properly account for contractually required deposits and complex non-routine equity transactions.

This control deficiency resulted in, among other things, errors to the following as of and for the years ended December 31, 2022 and 2021 and for the quarters ended March 31, 2023 and June 30, 2023.

● An overstatement of operating loss of $549,000 for the year ended December 31, 2021

● An overstatement of research and development tax credits of $119,000 for the year ended December 31, 2021

● An understatement of non-current deposits of $549,000 for the years ended December 31, 2021 and 2022 and for the quarters ended March 31, 2023 and June 30, 2023

● An overstatement of research and development tax receivable of $119,000 for the years ended December 31, 2021 and 2022 and for the quarters ended March 31, 2023 and June 30, 2023

● An understatement of 798,200 shares subject to potential rescission rights with a redemption value of 1,105,507 in the second quarter of 2022.

● The non recognition within earnings per share calculations of $135,000 fees paid in connection with shares subject to rescission rights which should have been accounted for as accretion.

In connection with the disclosure above relating to prior period adjustments as set forth in Note 1 to our consolidated financial statements, the Company has concluded that such earlier reporting reflected a material weakness.

After discovery of the errors, the Company has re-evaluated its controls and is in the process of implementing additional financial and accounting controls and review procedures to prevent a recurrence of such errors.

Remediation Plan

Our ongoing remediation efforts related to the above include the following actions:

● we have expanded available resources of experienced operational personnel providing qualitative review procedures of third party vendor invoices;

● we are designing and implementing additional monitoring controls necessary to detect incorrect billing and allocation of invoices received from third parties;

● we have implemented more frequent meetings with key vendors specifically for financial and accounting matters;

● we are engaging third parties to support the Company in the evaluation and treatment of technically complex non-routine equity transactions ;

● we are performing a regular review with the Company’s legal counsel to ensure all registration statements are current to prevent the sale of unregistered shares.

This remediation process is currently ongoing and cannot be considered complete at this time.

There can be no assurance that we will be successful in remediating the material weaknesses.

We plan to continue to assess internal controls and procedures and intend to take further action as necessary or appropriate to address any other matters as they are identified.

Notwithstanding the identified material weaknesses, we have concluded that the restated consolidated financial statements in this Annual Report on Form 10 K fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with GAAP.

Changes in Internal Control over Financial Reporting

There were no significant changes made in our internal controls over financial reporting.

Except for actions related to the Remediation Plan described above in this Part I, Item 4, there has been no change in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Controls

5 unchanged sentences

Legal Proceedings

There have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

For a further discussion of our Risk Factors, refer to Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes to our risk factors contained in our Annual Report on Form 10-K/A for the year ended December 31, 2022.

For a further discussion of our Risk Factors, refer to Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed with the SEC on November 20, 2023.

Unregistered Sales of Equity Securities and Use of Proceeds

3 unchanged sentences

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