Item 4. Controls and Procedures
Item
4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports
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 our management, including our chief executive officer and chief financial
officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our
management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls
and procedures. 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. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance
of achieving the desired control objectives.
Our
management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of the
design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation
and subject to the foregoing, our chief executive officer and chief financial officer concluded that, our disclosure controls and procedures
were not effective due to the material weaknesses in internal control over financial reporting described below.
The
ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses which are
indicative of many small companies with small number of staff:
(i)
inadequate
segregation of duties consistent with control objectives;
(ii)
inadequate
controls related to revenue recognition;
(iii)
insufficient
written policies and procedures for accounting and financial reporting with respect to the requirements and application of both U.S.
GAAP and SEC Guidelines; and
(iv)
inadequate
information technology general controls specifically related to security, segregation of duties, user access, restricted access and
change management.
Management’s
Plan to Remediate the Material Weakness
Management
has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses
are remediated, such that these controls are designed, implemented, and operating effectively. The Company has formally documented its
procedures for many of the significant accounting and financial reporting processes, in addition to, identifying and remediating design
deficiencies in its processes. The other remediation actions planned include:
(i)
implementation
of controls to ensure revenue is recognized upon shipment;
(ii)
further
documentation and implementation of control procedures and the implementation of control monitoring; and
(iii)
identify
and remedy gaps in our information technology general controls specifically related to the areas of security, segregation of duties,
user access, restricted access and change management.
Changes
in Internal Control over Financial Reporting
As
discussed above, we are implementing certain measures to remediate the material weaknesses identified in the design and operation of
our internal control over financial reporting. Other than those measures, there were no changes in our internal control over financial
reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2023, that materially
affected, our internal control over financial reporting as of that date.
39
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
In
the ordinary course of our operations, we become involved in ordinary routine litigation incidental to the business. Material proceedings
are described under Note 10, “Commitments and Contingencies” to the unaudited condensed consolidated financial statements
included in this Quarterly Report on Form 10-Q.