Item 4. Controls and Procedures
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and
procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure 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 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 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. Our
management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness
of our disclosure controls and procedures as of September 30, 2020. Based on the evaluation of our disclosure controls and procedures
as of September 30, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date our disclosure
controls were not effective due to the material weaknesses as disclosed in our annual report on form 10-K for the year ended December
31, 2019 and in our Amendment No. 1 of Form 10-Q/A for the quarterly period ended June 30, 2020.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected on a timely basis.
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The material weakness previously identified
during management’s assessment and reported in our 2019 Form 10-K was the lack of sufficient technical expertise on certain
accounting and tax requirements for new and unusual transactions. These control deficiencies could result in a material misstatement
of accounts or disclosures that would result in a material misstatement to our interim or annual financial statements that would
not be prevented or detected.
In connection with the identification of an
error that resulted in the restatement described in Note 3 of our condensed consolidated financial statements included in our Quarterly
Report on Form 10-Q/A for the period ended June 30, 2020, we also identified a material weakness related to controls over the purchasing
and receiving of inventory. Specifically, there was a lack of formalized purchasing and receiving processes and controls and the
functions were decentralized.
To address the material weakness reported in
our 2019 Form 10-K, we have hired an additional employee in our accounting team and have increased the involvement of consultants
with the required expertise to help ensure new and unusual transactions are appropriately recorded in order to remediate the material
weakness. We believe that these actions will help remediate the previously identified material weakness.
To address the material
weakness reported in our Quarterly Report on Form 10-Q/A for the period ended June 30, 2020, we have centralized the purchasing
and receiving functions and have added new processes and controls to ensure purchasing and receiving are recorded completely and
accurately. Additionally, the Company is implementing a new enterprise resource planning (“ERP”) system, which will
enable us to further enhance the processes and controls related to inventory, including purchasing and receiving.
We have implemented
additional control procedures to address the material weaknesses and we believe these actions will help remediate the previously
identified material weaknesses. The weaknesses, however, will not be considered remediated until the applicable controls operate
for a sufficient period of time and management is able to conclude that these controls are operating effectively.
Changes in Internal Control over Financial
Reporting
Other than the efforts noted above to remediate
the previously reported material weaknesses, there have been no changes in our internal control over financial reporting during
the quarter ended September 30, 2020, that has materially affected or, are reasonably likely to materially affect, our internal
control over financial reporting.
PART II – OTHER INFORMATION
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