Item 4. Controls and Procedures
ITEM 4. CONTROLS AND PROCEDURES
Our management, including our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities and Exchange Act of 1934 as of August 31, 2021. Our evaluation tested controls and other procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on our evaluation, as of August 31, 2021, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were not effective due to a material weakness in our internal control over financial reporting related to the financial reporting described below in the area of accounting for non-cash stock-based compensation.
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Changes in Internal Control over Financial Reporting
Other than as described below, there were no changes to internal controls in the first quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
During the second quarter ending November 30, 2021 and prior to filing this Quarterly Report, we completed the following steps to address the non-cash stock-based compensation deficiency identified in our Form 10-K/A filed on October 14, 2021:
• implemented a leading industry standard equity and disclosure management software system to calculate non-cash stock-based compensation expense;
• engaged an outside accounting advisory firm to review our revised stock-based compensation amounts and our methods for calculating non-cash stock-based compensation expenses going forward;
• developed and implemented additional procedures to increase the level of review, evaluation and validation of the Company’s stock-based compensation expense;
• increased the level of knowledge among our executives and accounting staff in the area of stock-based compensation; and
• independently tested the calculations produced by our new equity and disclosure management software system
PART II. OTHER INFORMATION
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