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Evaluation of Disclosure Controls and Procedures
−Removed: The Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2020.
+Added: The Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2020.
Our Chief Executive Officer, our Chief Financial Officer and other members of our senior management team supervised and participated in this evaluation.
2 unchanged sentences
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
−Removed: Based on the evaluation of our disclosure controls and procedures as of June 30, 2020, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
+Added: Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective, due to the fact that we are not yet able to conclude that the material weakness described in this Item 4 has been remediated by the changes we made in response to that material weakness.
+Added: As previously disclosed in Item 9A of our Annual Report on Form 10-K for the period ended September 30, 2020, our management identified a material weakness as of such date.
+Added: 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 the Company's annual or interim financial statements will not be able to be prevented or detected in a timely basis.
+Added: The identified material weakness is in connection with internal controls over the revenue recognition process, specifically the failure to properly identify whether the Company was to be considered the principal or the agent in certain transactions.
+Added: We determined that controls over the revenue recognition process were not operating effectively and the resulting control gap amounted to a material weakness in our controls over financial reporting.
+Added: During the period following our initial identification of the material weakness referred to above, management assessed various alternatives to remediate this material weakness and we implemented changes to our system of internal controls, which included the implementation of enhanced internal auditing procedures, whereby revenue transactions are subjected to an additional review process at the corporate level to ensure the correct accounting methodology is applied to all revenue transactions.
+Added: Although we have implemented such changes to our internal controls over financial reporting as described above, at this time, we cannot conclude that the material weakness has been remediated and we will continue to make changes and upgrade systems and processes throughout fiscal year 2021.
Changes in Internal Control over Financial Reporting.
−Removed: During the nine months ended June 30, 2020, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
+Added: During the year ended December 31, 2020, there was a significant change in internal controls related to the material weakness discussed above.
+Added: Internal controls around classifying whether the Company is considered the principal or the agent in transactions have been redesigned and implemented, which are intended to remediate the material weakness.
+Added: Prior to these changes, the Company’s primary procedure to find transactions that should be recorded “net” was reliance on a search of key words in the item description and stock-keeping unit.
+Added: The primary control failure related to the key words identifying certain items where the Company was the principal, but the item was incorrectly recorded on a net basis.
+Added: As a result, the primary identifier is not on the reliance of key words.
+Added: Instead, the new enhanced procedures include review of every line item with additional levels of review from both sales and financial management.
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.