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As of the period covered by this Quarterly Report on Form 10-Q, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).
−Removed: Our management concluded that as of June 30, 2022, our disclosure controls and procedures were not effective, because of the material weaknesses in our internal control over financial reporting identified by management as of December 31, 2021 (described below).
+Added: Our management concluded that as of September 30, 2022, our disclosure controls and procedures were not effective, because of the material weaknesses in our internal control over financial reporting identified by management as of December 31, 2021 (described below).
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.
Material Weaknesses in Control Activities
−Removed: The following were material weaknesses in control activities as of December 31, 2021, several of which also were determined to be the material weaknesses at December 31, 2020 and still exist in the control environment as of June 30, 2022:
+Added: The following were material weaknesses in control activities as of December 31, 2021, several of which also were determined to be the material weaknesses at December 31, 2020 and still exist in the control environment as of September 30, 2022:
• Insufficient resources within the accounting and financial reporting department to review the accounting for complex financial reporting transactions including areas such as business combinations, share based compensation, and the related income tax reporting.
3 unchanged sentences
• There are inadequate controls over physical inventory counts.
−Removed: During the review process related to the six months ended June 30, 2022, the Company identified a material weakness in one of the Company’s internal controls related to the review of valuations.
−Removed: Specifically, in the second quarter of 2022, there were ineffective controls regarding valuations, inclusive of appropriate valuation model inputs and appropriate forecasting for prospective financial information.
+Added: As of June 30, 2022, the Company identified a material weakness regarding valuations, inclusive of appropriate valuation model inputs and appropriate forecasting for prospective financial information.
+Added: In addition, during the review process related to the nine months ended September 30, 2022, the Company identified material weaknesses for ineffective controls over updating and distributing accounting policies and procedures across the organization.
Deficiencies in control activities contributed to material accounting errors identified and corrected through 2022 and prior years.
These corrected design deficiencies in control activities were previously considered to contribute to the potential for there to have been material accounting errors in multiple financial statement account balances and disclosures.
−Removed: The Company is in the process of remediating the above material weakness for 2022.
−Removed: Changes in Internal Control Over Financial Reporting
−Removed: There were no changes in our internal control over financial reporting, except as noted above, during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except for the implementation of remediation plans to address the material weaknesses discussed above.
+Added: The Company is in the process of remediating the above material weaknesses for 2022.
Material Weakness Remediation Plan and Status
Our remediation efforts are ongoing and we will continue our initiatives to implement and document policies, procedures, and internal controls.
−Removed: In 2021, the Company completed the following remedial actions:
+Added: The Company completed the following remedial actions:
• In 2021 and into 2022, the Company hired and trained additional resources within the accounting and financial reporting departments to review the accounting for warrant compensation accounting, share-based compensation accounting, and rebates.
−Removed: • Hired and trained additional resources to specifically manage cash and ensure adequate segregation of duties.
−Removed: • Implemented numerous general and access controls over all information technology (IT) systems that supports the Company's financial reporting processes.
−Removed: • Implementation and redesign of controls over inventory count procedures.
+Added: • The Company hired and trained additional resources to specifically manage cash and ensure adequate segregation of duties.
+Added: • The Company implemented numerous general and access controls over all information technology (IT) systems that supports the Company's financial reporting processes.
+Added: • The Company implementation and redesign of controls over inventory count procedures.
Our management believes that these actions, and additional actions to be taken, are reasonably designed to remediate the control deficiencies identified and strengthen our internal control over financial reporting.
As we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to address control deficiencies or modify certain of the remediation measures described above.
−Removed: Remediation of the identified material weaknesses and strengthening our internal control environment has continued during the period ended June 30, 2022 and will continue throughout 2022 and beyond, as necessary.
+Added: Remediation of the identified material weaknesses and strengthening our internal control environment has continued during the period ended September 30, 2022 and will continue throughout 2022 and beyond, as necessary.
We will test the ongoing operating effectiveness of the new and existing controls in future periods.
The material weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
+Added: Changes in Internal Control Over Financial Reporting
+Added: There were no changes in our internal control over financial reporting, except as noted above, during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except for the implementation of remediation plans to address the material weaknesses discussed above.
PART II – OTHER INFORMATION
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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.