What changed in this filing

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Item 4. Controls and Procedures

2024-05-14 compared with 2023-11-14 · 25 added, 72 removed, 6 unchanged (94% of the section changed)

1 unchanged sentence

Evaluation of disclosure controls and procedures.

disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported

within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management,

including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation and under the supervision of

our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures

(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q.

Based on such

evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, as a result of the continuation

of the previously disclosed material weakness discussed below, our disclosure controls and procedures were not effective because of a

material weakness in our internal control over financial reporting described below.

In light of this fact, our management, including

our Chief Executive Officer and Chief Financial Officer, has performed additional analyses, reconciliations, and other post-closing procedures

in order to conclude that, notwithstanding such material weakness, the unaudited condensed consolidated financial statements included

in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods

presented in conformity with GAAP as of the dates and for the periods presented in this Form 10-Q.

Management is responsible for establishing and maintaining adequate

internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, as amended.

A material weakness is a deficiency,

or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material

misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Continuation of material weakness .

We previously identified

a material weakness in controls over the financial reporting and the accounting for complex warrant issuances and the classification of

certain issued warrants.

This material weakness resulted in the failure to prevent material errors in accounting for the warrants as equity

classification when the warrants should have been classified as liabilities, and marked to market each reporting period, resulting in

the restatement of our financial statements as of and for the nine months ended September 30, 2022.

Further, the continuation of the abovementioned material weakness,

specifically in relation to the accounting for complex transactions and contracts of the Company, resulted in the untimely recognition

of an accrued liability and expense arising out of the RRA, which resulted in the restatement of our financial statements as of and for

the three months ended March 31, 2023.

Remediation Plan and Status

Management is working to remediate the material weakness described

above and to enhance our overall control environment.

Our remediation plan includes enhancing our contract review process, particularly

in the context of complex agreements and transactions, as well as internal communications in connection therewith, in addition to continuing

our engagement of third-party specialists to assist with accounting, valuation, and financial reporting functions in relation to significant

contracts, agreements and complex transactions.

Our ongoing remediation activities are subject to continued management review supported

by ongoing design and evaluation of our internal control over financial reporting framework.

The Audit Committee of our board of directors

is monitoring, and receives regular reports on the progress of, management’s remediation efforts.

Due to the nature of the remediation

process and the need for sufficient time after implementation to evaluate and test the design and effectiveness of the controls, no assurance

can be given as to the timing for completion of remediation We will not consider the material weakness remediated until our enhanced controls

are operational for a sufficient period of time and evaluated, enabling management to conclude that the enhanced controls are operating

Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation and under the supervision of our Chief Executive Officer and our Interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q.

Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that, as of March 31, 2024, as a result of the continuation of the previously disclosed material weakness discussed below, our disclosure controls and procedures were not effective because of a material weakness in our internal control over financial reporting described below.

In light of this fact, our management, including our Chief Executive Officer and Interim Chief Financial Officer, have performed additional analyses, reconciliations, and other post-closing procedures in order to conclude that, notwithstanding such material weakness, the unaudited condensed consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP as of the dates and for the periods presented in this Form 10-Q.

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, as amended.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Previously identified material weakness.

In 2021, we identified a material weakness in our internal control over financial reporting, as defined in the standards established by the Sarbanes-Oxley Act of 2002.

This material weakness related to a lack of qualified accounting and financial reporting personnel with an appropriate level of experience and inadequate procedures for the accounting close process including obtaining information supporting significant accounting estimates and judgments affecting the financial statements on a timely basis.

As a result, our management concluded that a material weakness existed in our internal control over financial reporting.

Through the year ended December 31, 2022 and 2023, we continued to implement remediation initiatives in response to the previously identified material weakness, including, but not limited to, hiring additional experienced accounting and financial reporting personnel and modifying a new Enterprise Resource Planning (ERP) System which will assist in the automation of processes, including standardizing workflows, enhancing segregation of duties, and ensuring compliance with policies.

As a result of the significant turnover of key finance personnel at the end of 2023, we have concluded there was a gap in the implementation of the above remediation initiatives with certain tasks that would have to be completed to remediate the material weakness not being handed over to the new personnel.

Our remediation activities are ongoing and are subject to continued management review supported by ongoing design and testing of our framework of internal controls over financial reporting.

Remediation Plan.

In order to remediate the material weakness, the Company plans to formally document the system controls that we have in place, including user access reviews and a formally documented segregation of duties that includes formal system-based roles.

In addition, there is a plan, which is expected to be completed prior to the end of the second quarter of 2024, that will ensure that all internal controls are fully documented with a testing plan that will be reviewed and signed off quarterly.

We will not consider the material weakness remediated until our enhanced control is operational for a sufficient period of time and tested, enabling management to conclude that the enhanced controls are operating effectively.

Changes in internal control over financial reporting.

During the third quarter of 2023, except as described above in “Remediation Plan and Status,” there were no other changes

in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d)

of the Exchange Act that occurred during the period covered by this Form 10-Q that have materially affected, or are reasonably likely

to materially affect, our internal control over financial reporting.

The Company’s management has expended, and will continue to expend,

a substantial amount of effort and resources in connection with the remediation of previously identified material weaknesses, including

the material weakness discussed above, and the ongoing improvement of our internal control over financial reporting.

During the fiscal quarter ended March 31, 2024, there were no other changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent limitation on the effectiveness of internal control.

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations,

including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability

to eliminate misconduct completely.

Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes

that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide

reasonable, not absolute assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures

must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits

of possible controls and procedures relative to their costs.

Moreover, projections of any evaluation of effectiveness to future periods

are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

We intend to continue to monitor and upgrade our internal controls as necessary or appropriate

for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely.

Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

PART II - OTHER INFORMATION

LEGAL PROCEEDINGS

Although we may, from time to time, we may be subject to litigation

and other claims in the normal course of business, we are currently not a party to any material legal proceeding.

No amounts have been

accrued in the condensed consolidated financial statements with respect to any matters.

Although we may, from time to time, we may be subject to litigation and other claims in the normal course of business, we are currently not a party to any material legal proceeding.

No amounts have been accrued in the condensed consolidated financial statements with respect to any such matters.

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

Item 4. Controls and Procedures