What changed in this filing

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Item 4. Controls and Procedures

2023-03-17 compared with 2023-03-17 · 43 added, 42 removed, 12 unchanged (88% of the section changed)

2 unchanged sentences

which includes our President, Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure

controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange

Act”)) as of the end of the period covered by this report.

Based upon that evaluation, our President, Chief Executive Officer and

Chief Financial Officer concluded that the disclosure controls and procedures were not effective due to multiple material weaknesses

discussed below.

Notwithstanding such material weaknesses, we believe the financial information presented herein is materially correct

and fairly presents the financial position and operating results of the quarter ended April 30, 2021.

As previously disclosed in

Item 9A of our Annual Report on Form 10-K for the fiscal year ended October 31, 2020, management has identified material weaknesses as

of that date.

The identified material weaknesses related to the accounting for stock-based compensation awards and inventories at one

of our subsidiaries.

We further concluded, based upon our restatement, that our annual financial

statements during the fiscal year ended October 31, 2020 inaccurately accounted for certain intercompany eliminations in our consolidated

statements of operations.

As a result, we determined that there was an overstatement of net sales and cost of sales in the consolidated

statement of operations in our condensed consolidated financial statements for the three and six month periods ended April 30, 2020.

was due to inadequate design and implementation of controls to evaluate and monitor the presentation and compliance with accounting principles

generally accepted in the United States of America related to the statement of operations.

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 prevented or detected on a timely basis.

To remediate the material weakness, we are initiating

controls and procedures in order to:

controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the

“Exchange Act”)) as of the end of the period covered by this report.

Based upon that evaluation, our President, Chief

Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were not effective due to

multiple material weaknesses discussed below.

Notwithstanding such material weaknesses, we believe the financial information

presented herein is materially correct and fairly presents the financial position and operating results of the quarter ended January

previously disclosed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended October 31, 2020, management has identified

material weaknesses as of that date.

The identified material weaknesses related to the accounting for stock-based compensation

awards and inventories at one of our subsidiaries.

We further concluded, based

upon our restatement, that our annual financial statements during the fiscal

year ended October 31, 2020 inaccurately accounted for certain intercompany eliminations in our consolidated statements of operations.

As a result, we determined that there was an overstatement of net sales and cost of sales in the consolidated statement of operations

in our condensed consolidated financial statements for the three month period January 31, 2020.

This was due to inadequate design and implementation of

controls to evaluate and monitor the presentation and compliance with accounting principles generally accepted in the United States of

America related to the statement of operations.

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 prevented or detected on a timely basis.

To remediate the material

weakness, we are initiating controls and procedures in order to:

the importance of a strong control environment, to emphasize the technical requirements for controls that are designed, implemented

2 unchanged sentences

the processes for documenting and alerting key personnel, including our board members, officers, auditors and outside accountants,

of non-reoccurring events related to stock-based compensation awards to ensure such events are timely and adequately recorded and

communicated to the appropriate parties.

of non-reoccurring events related to stock-based compensation awards to ensure such events are timely and adequately recorded

and communicated to the appropriate parties.

have replaced and hired new employees in the accounting department at the subsidiary where the inventory analysis issue occurred

and have made upgrades to the computer systems at the subsidiary.

Further, we hired a new director of finance at the subsidiary that

is responsible for overseeing inventory counts and we are enhancing controls in the inventory business process over (i) inventory

count procedures by requiring more frequent physical audits of our inventory, and (ii) review of inventory adjustments and approvals.

material weaknesses identified above will not be considered remediated until our remediation efforts have been fully implemented and

we have concluded that these controls are operating effectively.

Further, we hired a new director of finance at the subsidiary

that is responsible for overseeing inventory counts and we are enhancing controls in the inventory business process over (i)

inventory count procedures by requiring more frequent physical audits of our inventory, and (ii) review of inventory adjustments

and approvals.

material weaknesses identified above will not be considered remediated until our remediation efforts have been fully implemented

and we have concluded that these controls are operating effectively.

does not expect that our internal control over financial reporting will prevent or detect all errors and all fraud.

A control system,

no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls

must be considered relative to their costs.

Because of the inherent limitations in a cost-effective control system, no evaluation of

internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that

all control issues and instances of fraud, if any, have been or will be detected.

system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of

the control systems are met.

Further, the design of a control system must reflect the fact that there are resource constraints,

and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in a cost-effective

control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due

to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

in Internal Control over Financial Reporting

than the changes intended to remediate the material weaknesses as discussed above and in Part II, Item 9A of our Annual Report

on Form 10-K for the year ended October 31, 2020, there was no change in our internal control over financial reporting (as defined in

Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended April 30, 2021 that has materially affected, or

is reasonably likely to materially affect, our internal control over financial reporting.

than the changes intended to remediate the material weaknesses as discussed above and in Part II, Item 9A of our Annual Report on

Form 10-K for the year ended October 31, 2020, there was no change in our internal control over financial reporting (as defined

in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended January 31, 2021 that has materially

affected, or is reasonably likely to materially affect, our internal control over financial reporting.

II - 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.

What changed 10-Q/A

Item 4. Controls and Procedures