Item 2. Management’s Discussion and Analysis
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .
Caution Concerning Forward-Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 29, 2024 (the “Annual Report”) and our unaudited interim condensed consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q (the “Quarterly Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to the Company’s plans and strategy for its business, includes forward looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. As a result of many factors, including those factors set forth in Part I, Item 1A of the Annual Report under the heading “Risk Factors”, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023, and the condensed consolidated financial statements and accompanying notes included elsewhere in this report.
Overview
We are a commercial-stage biopharmaceutical company focused on our only product candidate PEDMARK ® . On September 20, 2022, we received approval from the U.S. Food and Drug Administration (“FDA”) for PEDMARK ® (sodium thiosulfate injection) to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors. This approval makes PEDMARK ® the first and only treatment approved by the FDA in this area of significant unmet medical need. On October 17, 2022, we announced commercial availability of PEDMARK ® in the United States. Further, PEDMARQSI ® (PEDMARK ® brand name outside of U.S.) received European Commission Marketing Authorization in June 2023 and received U.K. approval in October 2023.
In March 2024, we announced that we entered into an agreement with Norgine , a leading European specialist pharmaceutical company. This is an exclusive licensing agreement under which Norgine will commercialize PEDMARQSI ® in Europe, Australia and New Zealand. PEDMARQSI ® is the first and only approved therapy in the EU and U.K. for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients 1 month to < 18 years of age with localized, non-metastatic solid tumors.
Under the terms of the licensing agreement, we received approximately $43.2 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties on net sales of PEDMARQSI ® in the licensed territories up to the mid-twenties. Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.
We sell PEDMARK ® in the United States through an experienced field force including Regional Pediatric Oncology Specialists and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced ototoxicity and our programs supporting patient access to PEDMARK ® . Sales outside of the U.S. are through experienced distributors which market and promote PEDMARK ® in developing markets.
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Further, we have established Fennec HEARS ® , a comprehensive single source program designed to connect PEDMARK ® patients to both patient financial and product access support. The program offers assistance and resources, regardless of insurance type, that can address co-pays or lack of coverage when certain eligibility requirements are met. Fennec HEARS ® also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK ® and provide tips and resources for managing treatment.
We received Orphan Drug Exclusivity for PEDMARK © in January 2023, which provides seven years of market exclusivity in the United States from its FDA approval on September 20, 2022, until September 20, 2029. The USPTO has now granted four additional U.S. patents that cover the PEDMARK ® formulation and its use, each of which have been, or are in the process of being, listed in the U.S. FDA’s “Orange Book” (U.S. Patent No. 11,291,728 (issued April 5, 2022), U.S. Patent No. 11,510,984 (issued November 29, 2022), U.S. Patent No. 11,617,793 (issued April 4, 2023), and U.S. Patent No. 11,964,018 (issued April 23, 2024)). The USPO has also recently allowed two additional patent applications (U.S. Patent Application Nos. 17/992,703 and 17/992,707) that cover the use of the PEDMARK® formulation. Five additional United States patent applications from this family are pending at the USPTO covering various sodium thiosulfate formulations and uses. We are also pursuing additional patent applications in both the U.S. and internationally for PEDMARK ® .
There can be no assurance that we do not or will not infringe on patents held by third parties or that third parties in the future will not claim that we have infringed on their patents. In the event that our product or technologies infringe or violate the patent or other proprietary rights of third parties, there is a possibility we may be prevented from pursuing product development, manufacturing or commercialization of our product until the underlying patent dispute is resolved. For example, there may be patents or patent applications held by others that contain claims that our product or operations might be determined to infringe or that may be broader than we believe them to be. Given the complexities and uncertainties of patent laws, there can be no assurance as to the impact that future patent claims against us may have on our business, financial condition, results of operations, or prospects.
PEDMARK ® Product Overview
PEDMARK ® is the first and only therapy approved by the FDA indicated to reduce the risk of ototoxicity associated with cisplatin treatment in pediatric patients with localized, non-metastatic, solid tumors. It is a unique formulation of sodium thiosulfate in single-dose, ready-to-use vials for intravenous use in pediatric patients. PEDMARK ® is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (“COG”) Protocol ACCL0431 and SIOPEL 6.
In the U.S. and Europe, it is estimated that more than 10,000 children annually may receive platinum-based chemotherapy. The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids. There is currently no established preventive agent for this hearing loss and only expensive, technically difficult, and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit. Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.
PEDMARK ® has been studied by co-operative groups in two Phase 3 clinical studies of survival and reduction of ototoxicity, COG ACCL0431 and SIOPEL 6. Both studies have been completed. The COG ACCL0431 protocol enrolled childhood cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors. SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.
Cisplatin Induced Ototoxicity
Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric malignancies. Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.
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The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids or cochlear implants, which can be helpful for some, but do not reverse the hearing loss and can be costly over time. Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement.
Although we have obtained applicable regulatory approval to sell PEDMARK® in the United States and approval for PEDMARQSI in Europe and U.K., we recognize there may still be a need to establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties or other revenue.
We generated net income of approximately $12.8 million for the three months ended March 31, 2024, and a net loss of $6.1 million for the same period in 2023. As of March 31, 2024, our accumulated deficit was approximately $206.4 million ($219.2 million at December 31, 2023).
We believe that our cash and cash equivalents as of March 31, 2024, which totaled $51.2 million and cash from product sales, will be sufficient to meet our cash requirements through at least the next twelve months. We anticipate the Norgine licensing deal will alleviate the need to find alternative sources of financing and help us to fund operations while we expand our markets to areas outside of U.S., Europe, Australia and New Zealand. We continue to look to establish collaborations that will provide us with funding for the out-license or sale of certain aspects of our intellectual property portfolio or from other sources.
Our operating expenses will depend on many factors, including the progress of our commercialization efforts and efficiency of our operations and current resources. Our research and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and other fees and costs related to the commercialization of our product, will depend on the availability of financial resources, the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict. Our general and administration expenses include expenses associated with the compensation of employees, stock-based compensation, professional fees, consulting fees, insurance and other administrative matters associated in support primarily of our commercialization of PEDMARK ® .
Results of Operations
Three months ended March 31, 2024 versus three months ended March 31, 2023:
Three Months Ended
Three Months Ended
In thousands of U.S. Dollars
March 31, 2024
%
March 31, 2023
%
Change
PEDMARK product sales, net
$
7,419
$
1,677
$
5,742
Licensing revenue
17,958
—
17,958
Total revenue
25,377
1,677
23,700
Operating expenses:
Cost of product sales
550
5
95
1
455
Research and development
3
0
%
4
0
%
(1)
Selling and marketing
5,209
45
%
2,531
36
%
2,678
General and administration
5,872
50
%
4,317
62
%
1,555
Total operating expense
11,634
100
%
6,947
100
%
4,687
Income/(loss) from operations
13,743
(5,270)
19,013
Unrealized loss on securities
(11)
(30)
19
Amortization expense
(20)
(72)
52
Interest expense
(1,034)
(798)
(236)
Unrealized foreign exchange loss
(38)
9
(47)
Interest income
197
109
88
Net income/(loss) from operations
$
12,837
$
(6,052)
$
18,889
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● The Company recorded net product sales of $7.4 million and $18.0 million in licensing revenue related to the Norgine transaction for the three-month period ended March 31, 2024, compared to $1.7 million in product sales and no licensing revenue for the same period in 2023. The Company recorded discounts and allowances against sales in the amount of $2.1 million and cost of products sold of $0.6 million for the three-month period ended March 31, 2024. For the same period in 2023, the Company recorded $0.2 million in discounts and allowances and $0.1 million in cost of goods sold.
● Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions and out-of-pocket expenses. The Company recorded $5.2 million in selling and marketing expenses for the period ended March 31, 2024, compared to $2.5 million for the same period in 2023. The increase is largely related to increased payroll and additional marketing expenses in the comparable period.
● There was a $1.6 million increase in general and administrative expenses for the three-months ended March 31, 2024, compared to same period in 2023. There was an increase in consulting and professional costs of approximately $1.7 million for the three-months ended March 31, 2024, compared to same period in 2023 which is largely attributable to increased European pre-commercialization related expenses.
● The value of the Processa Pharmaceuticals, Inc. (“Processa”) shares held by us declined by $0.01 million for three-months ended March 31, 2024. The shares declined in value by $0.03 during same period in 2023. We acquired the Processa shares on October 30, 2020. The Processa shares are marked to market at each balance sheet date with the resulting change in value being booked as an unrealized gain or loss.
● Amortization expense decreased by $0.1 million for three-months ended March 31, 2024, over same period in 2023.
● Interest expenses increased by $0.2 million for the three-month ended March 31, 2024 compared to same period in 2023. The increase was driven mainly by higher average debt balances and higher interest rates on long-term debt.
● Interest income increased by $0.1 million for the three-months ended March 31, 2024, as compared to same period in 2023, due to higher rates on money market accounts for the comparable periods.
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Quarterly Information
The following table presents selected condensed financial data for each of the last eight quarters through March 31, 2024, as prepared under generally accepted accounting principles within the United States, or U.S. GAAP (dollars in thousands, except per share information):
Net (Loss)/Income for the
Basic Net (Loss)/Income per
Diluted Net (Loss)/Income per
Period
Period
Common Share
Common Share
June 30, 2022
$
(5,075)
$
(0.19)
$
(0.19)
September 30, 2022
(8,089)
(0.31)
(0.31)
December 31, 2022
(6,857)
(0.26)
(0.26)
March 31, 2023
(6,052)
(0.23)
(0.23)
June 30, 2023
(5,444)
(0.21)
(0.21)
September 30, 2023
(1,867)
(0.07)
(0.07)
December 31, 2023
(2,682)
(0.10)
(0.10)
March 31, 2024
12,837
0.47
0.41
Liquidity and Capital Resources
As at
As at
Selected Asset and Liability Data (thousands):
March 31, 2024
December 31, 2023
Cash and equivalents
$
51,184
$
13,269
Other current assets
16,987
13,589
Current liabilities
9,836
7,553
Working capital (1)
58,335
19,305
(1) [Current assets – current liabilities]
Selected Equity:
Common stock and additional paid in capital
208,179
206,380
Accumulated deficit
(206,408)
(219,245)
Stockholders’ equity/(deficit)
3,014
(11,622)
Cash and cash equivalents were $51,184 as of March 31, 2024, and $13,269 at December 31, 2023. The increase in cash and cash equivalents between March 31, 2024, and December 31, 2023, is the result of cash outlays for operating expenses related to the promotion of our product, small amounts of research and development and general and administrative expenses, which were offset by cash inflows of $43,204 from Norgine licensing deal, cash collections on product sales of $3,115 and cash inflows of $627 from various option exercises. There was an increase of $3,398 in other current assets between March 31, 2024, and December 31, 2023, and an increase in current liabilities of $2,283. The overall result was an increase in working capital of $39,030.
The following table illustrates a summary of cash flows data for the three-month periods of March 31, 2024 and 2023:
Selected Cash Flow Data
Three Months Ended
Three Months Ended
(dollars and shares in thousands)
March 31, 2024
March 31, 2023
Net cash provided by operating activities
$
39,047
$
(5,577)
Net cash provided by investing activities
—
—
Net cash provided by financing activities
(1,132)
193
Net cash flow
$
37,915
$
(5,384)
Net cash used in operating activities for the three months ended March 31, 2024, primarily reflected a net income of $12,837. The three-month income was adjusted for the add back of non-cash items consisting of $1,191 in stock-based compensation expense, with unrealized loss on securities of $11, PIK interest of $398 and amortization expense of $743 for the three months ended March 31, 2024. For the three months ended March 31, 2024, there was a net increase in accounts receivable, inventory, prepaid and other assets of $3,414; coupled with a net increase in current liabilities of $27,281. Approximately, $25,246 of this increase relates to deferred revenue associated with the Norgine transaction.
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Three-month positive cash flows from operating activities were $39,047 and negative 5,577, respectively, for the periods ended March 31, 2024, and 2023. Net cash used in financing activities for the three months ended March 31, 2024, was $1,132. During the same period in 2023, there were various equity exercises resulting in cash inflows from financing activities of $193. Net cash flows from the three month-periods ended March 31, 2024 and 2023, were positive $37,915 and negative $5,384, respectively.
We continue to pursue various strategic alternatives including collaborations with other pharmaceutical and biotechnology companies. Our projections of further capital requirements are subject to substantial uncertainty. Our working capital requirements may fluctuate in future periods depending upon numerous factors, including: our ability to obtain additional financial resources; our ability to enter into collaborations that provide us with up-front payments, milestones or other payments; results of our research and development activities; progress or lack of progress in our preclinical studies or clinical trials; unfavorable toxicology in our clinical programs, our drug substance requirements to support clinical programs; change in the focus, direction, or costs of our research and development programs; headcount expense; the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our patent claims; competitive and technological advances; the potential need to develop, acquire or license new technologies and products; our business development activities; new regulatory requirements implemented by regulatory authorities; the timing and outcome of any regulatory review process; and commercialization activities, if any.
Outstanding Share Information
Our outstanding share data as of March 31, 2024 and December 31, 2023 was as follows (in thousands):
March 31,
December 31,
Outstanding Share Type
2024
2023
Change
Common shares
27,105
26,411
694
Warrants
150
150
—
Stock options
4,767
5,032
(265)
Total
32,022
31,593
429
Financial Instruments
We invest excess cash and cash equivalents in high credit quality investments held by financial institutions in accordance with our investment policy designed to protect the principal investment. As of March 31, 2024, we had approximately $1.3 million in our cash accounts and $49.9 million in savings and money market accounts. While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC and may lose value.
Our investment policy is to manage investments to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment. Investments may be made in U.S. or Canadian obligations and bank securities, commercial paper of U.S. or Canadian industrial companies, utilities, financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or carry ratings appropriate to the policy. Securities must have a minimum Dun & Bradstreet rating of A for bonds or R1 low for commercial paper. The policy also provides for investment limits on concentrations of securities by issuer and maximum-weighted average time to maturity of twelve months. This policy applies to all of our financial resources. The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments. Until we are cash flow positive from operations, we have chosen to avoid investments of a trading or speculative nature.
We classify fixed income investments with original maturities at the date of purchase greater than three months which mature at or less than twelve months as current. We carry investments at their fair value with unrealized gains and losses included in other comprehensive income (loss); however, we have not held any instruments that were classified as short-term investments during the periods presented in this Quarterly Report.
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Off-Balance Sheet Arrangements
Since our inception, we have not had any material off-balance sheet arrangements.
Contractual Obligations and Commitments
None, other than the OHSU Agreement, lease agreements, and severance amounts described in notes to our condensed consolidated financial statements contained elsewhere in this Quarterly Report.
Critical Accounting Policies and Estimates
A summary of our critical accounting policies and use of estimates are presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our Annual Report. There have been no material changes to our critical accounting policies and use of estimates during the three months ended March 31, 2024.
Revenue Recognition
Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company determines it expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). As part of the accounting for these arrangements, the Company must make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.
Stock-based Compensation
The calculation of the fair values of our stock-based compensation plans requires estimates that require management’s judgments. Under ASC 718, the fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model. The valuation models require assumptions and estimates to determine expected volatility, expected life, expected dividends and expected risk-free interest rates. The expected volatility was determined using historical volatility of our stock based on the contractual life of the award. The risk-free interest rate assumption was based on the yield on zero-coupon U.S. Treasury strips at the award grant date. We also used historical data to estimate forfeiture experience. In valuing options granted in the fiscal years ended March 31, 2024, we used the following weighted average assumptions:
Valuation Assumptions
Black-Scholes Model Assumptions
March 31, 2024
Expected dividend
-
%
Risk free rate
4.73
%
Expected volatility
48
%
Expected life
1.50 years
Common shares and warrants
Common shares are recorded as the net proceeds received on issuance after deducting all share issuance costs and the relative fair value of investor warrants. Warrants are recorded at relative fair value and are deducted from the proceeds of common shares and recorded on the consolidated statements of shareholders’ equity (deficit) as additional paid-in capital.
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Newly Adopted and Recent Accounting Pronouncements
In December 2023 , the Financial Accounting Standards Board issued Accounting Standards Update No. 2023-09 , “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements.
On March 21, 2024, the FASB issued Accounting Standards Update (ASU) 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards , which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of FASB Accounting Standards Codification (FASB ASC) 718, Compensation-Stock Compensation. The Company believes that ASU 2024-01 will not have a material impact on its condensed consolidated financial statements.
Item 3. Controls and Procedures .
(a) Evaluation of Disclosure Controls and Procedures .
The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of December 31, 2023. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports the Company files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, the Company’s management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints that require the Company’s management to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures 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.
Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2023, the Company's disclosure controls and procedures were not effective because of a material weakness in the Company's internal control over financial reporting related to fees and allowances paid to distributors for distinct services.
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's management evaluated the effectiveness of its internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on that evaluation, the Company’s management has concluded that, as of December 31, 2023, our internal controls over financial reporting were not effective because of the existence of a material weakness in internal control over financial reporting related to fees and allowances paid to distributors for distinct services.
A material weakness is defined as a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
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With respect to the fees and allowances paid to distributors for distinct services, the execution of the controls over the application of accounting literature did not operate effectively with respect to:
●
Measurement and classification of fees paid to customers for distinct services under ASC 606 Revenue from Contracts with Customers.
●
Measurement of services received and expensed in a reporting period, measurement of services that pertain to future periods, and the periods of attribution for those future services.
The Company is evaluating the material weaknesses and developing a plan of remediation to strengthen the effectiveness of the design and operation of its internal control environment. The remediation plan will include the following actions:
●
Enhance the formality of its review procedures with respect to accounting for new contracts with customers.
●
Strengthen the review process to improve the operation of accounting and review controls with respect to complex and non-recurring transactions, as well as those transactions that require significant estimates and judgments.
●
Engaging additional service providers or hiring additional full-time employees may be necessary and advisable to address these weaknesses.
The actions that the Company is taking are subject to ongoing senior management review as well as Audit Committee oversight. The Company is committed to maintaining a strong internal control environment and believes that these remediation efforts will represent significant improvements in its controls. The Company has started to implement these steps; however, some of these steps will take time to be fully integrated and confirmed to be effective and sustainable. Additional controls may also be required over time. Until the remediation steps set forth above are fully implemented and tested, the material weakness described above will continue to exist.
(b) Changes in Internal Control over Financial Reporting.
The Company is in the process of implementing changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) but does not believe any of these changes, as of the period covered by this Quarterly Report on Form 10-Q has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
PART II: OTHER INFORMATION
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.