Exyn Technologies, Inc. 10-Q

Item 4. Controls and Procedures. ​ Disclosure Controls and Procedures a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness 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) as of March 31, 2026, the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, and as a result of the material weaknesses in our internal control over financial reporting described below, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of March 31, 2026. Material Weaknesses As previously disclosed in our registration statement on Form S-1, as amended, in connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2025, our independent registered public accounting firm communicated to us, and management concluded, that there were 6 material weaknesses in our internal control over financial reporting largely arising from our having too few staff within our operations with sufficient knowledge of, and experience in, technical accounting and reporting matters. These material weaknesses included: (1) a lack of sufficient oversight and monitoring controls related to inventory tracking and valuation, including controls over completeness, accuracy, and the application of appropriate costing methodologies; (2) failure to register with the applicable Canadian provinces to collect and remit required Canadian sales tax, see “Risk Factors — We may be subject to significant liabilities, penalties, interest, and other adverse consequences if we fail to properly assess, collect, and remit Canadian indirect taxes, and any such exposure could be material to our business, financial condition, results of operations, and cash flows”; (3) failure to properly state accrued liabilities, resulting in corresponding errors in expense recognition; (4) failure to appropriately account for SAFE instruments in accordance with U.S. GAAP, including the initial misclassification of such instruments as equity rather than liability-classified instruments, (5) issues with our consolidated financial statement preparation processes, including errors and inconsistencies with footnote disclosures, classification errors and failure to reconcile to the underlying financial information and (6) errors in the classification and related disclosure of the WAB Loan Agreement. Each of the above material weaknesses indicates a current lack of adequate review controls over our financial reporting process. 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 annual or interim financial statements will not be prevented or detected on a timely basis. As of March 31, 2026, each of these material weaknesses remained unremediated. Because disclosure controls and procedures include components of internal control over financial reporting, the existence of these material weaknesses caused our principal executive officer and principal financial officer to conclude that our disclosure controls and procedures were not effective as of March 31, 2026. Status of Remediation We continue to design and implement measures intended to remediate the material weaknesses described above, including hiring additional internal and external qualified accounting, finance, and IT personnel; performing a risk assessment to identify relevant risks and control objectives; and formalizing and communicating policies and procedures over our financial close, financial reporting, and other accounting processes. As of the date of this report, none of the six material weaknesses has been fully remediated, and we cannot predict the timing or ultimate success of our remediation efforts. The implementation of these measures may place significant strain on our management, operational, and financial resources for the foreseeable future, and there can be no assurance that these or any future 26 Table of Contents measures will remediate the existing material weaknesses or that additional material weaknesses or significant deficiencies will not be identified. Restatement As previously disclosed, the Company restated its consolidated balance sheet as of December 31, 2025, to reclassify approximately $3.5 million of notes payable under the WAB Loan Agreement from long-term to current liabilities. The reclassification was required because a December 2025 modification and forbearance agreement accelerated the maturity of the obligation to June 2026, such that the Company no longer had the right to defer settlement for at least one year from the balance sheet date. The restatement had no effect on the Company’s previously reported consolidated statements of operations, stockholders’ deficit, total liabilities, or cash flows. b) Changes in Internal Control over Financial Reporting. Other than the ongoing remediation measures described above, there were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are an “emerging growth company” and intend to take advantage of certain exemptions from reporting requirements applicable to other public companies, including the exemption from the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act. As a result, our remediation efforts will not be independently attested to until such time as we no longer qualify as an emerging growth company. ​ 27 Table of Contents PART II—OTHER INFORMATION Item 1. Legal Proceedings. From time to time, we may become involved in various legal proceedings that arise in the ordinary course of our business. We are not currently a party to any material legal proceedings, and are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.