LIFECORE BIOMEDICAL, INC. DE 10-Q

Item 4. Controls and procedures Evaluation of disclosure controls and procedures As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation 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 Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of February 23, 2025, due to the material weaknesses in internal control over financial reporting that were disclosed in the 2024 Annual Report. The Company has begun executing a plan for the remediation of the material weaknesses in internal control over financial reporting. Management’s plan for remediation of the material weaknesses Management, with the oversight of the Audit Committee, is committed to remediating the control deficiencies. The remediation efforts are intended to both address the identified material weaknesses and to enhance our overall control environment. Steps taken by management to date include the following: • We have expanded the internal audit function by engaging a third-party consultant to assist with remediation efforts, including enhancing our risk assessment, evaluating gaps in current processes and controls, and developing a remediation plan; • We have added qualified personnel to our accounting and finance team with the appropriate qualified experience in financial reporting, consolidations, technical accounting, and application of U.S. GAAP; and • We have selected a new enterprise planning resource ("ERP") solution and are designing new business processes and systems of control to support the remediation. The Company plans the following additional steps to remediate the material weaknesses described above and strengthen its internal control over financial reporting include the following: • Complete implementation and testing of the Company's control environment and risk assessment procedures during the fourth quarter of fiscal 2025; • Complete the design and implementation of the ERP in the second half of fiscal year 2026; and -40- Table of Contents • Test and subsequently monitor the design and operating effectiveness of internal controls over financial reporting immediately following the implementation of the ERP. The material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. As we continue to evaluate operating effectiveness and monitor improvements to our internal control over financial reporting, we may take additional measures to address control deficiencies or modify the remediation plan described above. Changes in internal control over financial reporting Except for the remediation planning efforts described above, there have been no changes in our system of internal control over financial reporting during the three months ended February 23, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Legal proceedings In the ordinary course of business, the Company is involved in various legal proceedings and claims. For further discussion, see the disclosures contained in note 9 to the condensed consolidated financial statements in this Form 10-Q.