CIRCLE8 GROUP INC 10-Q

Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the disclosure controls and procedures as of June 30, 2026, the end of the period covered by this report on Form 10-Q. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act (“Exchange Act”), means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms promulgated by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the 75 objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also 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; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Our management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our internal control over financial reporting as of June 30, 2026, based on the framework established in Internal Control—Integrated Framework (2023) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Prior to the Merger, we were a private company and had limited accounting and financial reporting personnel with which to address our internal controls and related procedures. Based upon that evaluation, our management concluded that our internal control over financial reporting was not effective as of June 30, 2026, due to the material weaknesses described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting as defined under the Exchange Act, as amended, and by the Public Company Accounting Oversight Board (United States), such that there is a reasonable possibility that a material misstatement of our annual financial statements will not be prevented or detected on a timely basis. This conclusion is based on the identification of material weaknesses in the areas of accounting for complex financial transactions or non-routine transactions. The Company currently consults with third-party experts to overcome this weakness. The Company had a material weakness related to lack of segregation of duties in finance and accounting. There is also an inadequate design of policies and procedures that are tested and monitored to prevent and detect potential errors. Due to our limited accounting and financial reporting personnel, we have ineffective controls over the period end financial disclosure and reporting process. Additionally, the Company also had a significant deficiency due to non-payment of payroll taxes on vested restricted stock units. We are in the process of implementing measures designed to improve our internal control over financial reporting to remediate the material weaknesses and plan to implement them in the second half of 2026. For example, we plan to design and implement improved processes and internal controls, including ongoing senior management review and Audit Committee oversight. Additionally, we plan to further develop and implement formal policies, processes and documentation procedures relating to our financial reporting, including the oversight of third-party service providers. Our actions are subject to ongoing executive management review and will also be subject to Audit Committee oversight. Notwithstanding the material weaknesses in internal control over financial reporting described above, our management has concluded that our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly stated in all material respects. On January 23, 2026, the Company completed the acquisition of Circle8 Group B.V.. The Company accounted for this acquisition as a business combination. As this acquisition occurred in the first quarter of 2026, the scope of our assessment of our internal control over financial reporting does not include Circle8 Group B.V. This exclusion is in accordance with the Securities and Exchange Commission’s general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of such acquisition. As of June 30, 2026, Circle8 Group B.V. had total assets that represented approximately 89% of the Company's consolidated total assets and total revenues that represented approximately 36% of the Company's consolidated revenues. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 76 PART II—OTHER INFORMATION