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Evaluation of Disclosure Controls and Procedures
−Removed: As of June 30, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
+Added: As of September 30, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report, due to a material weakness identified in the fourth quarter of fiscal year 2024 that has not yet been remediated.
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As disclosed in Part II Item 9A.
−Removed: "Controls and Procedures" in our annual report on Form 10-K for the year ended March 31, 2024, during fiscal year 2024 we identified three material weaknesses in internal controls:
+Added: "Controls and Procedures" in our annual report on Form 10-K for the year ended March 31, 2024, during fiscal year 2024 we identified three material weaknesses in our internal controls:
Controls over technical accounting for complex and non-routine transactions - We did not have adequate supervision and review controls over complex technical accounting related to non-routine goodwill impairment transactions and related analyses.
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Remediation Status for Material Weaknesses in Internal Control Over Financial Reporting
−Removed: Beginning during the three months ended June 30, 2024, we implemented our previously-disclosed remediation plans:
+Added: Beginning during the three months ended June 30, 2024, and continuing into the three months ended September 30, 2024, we implemented our previously-disclosed remediation plans:
Technical accounting for complex and non-routine transactions - We executed two transactions during the first quarter of our fiscal year 2025, partial repurchases of the Notes and the amendment and modification of our Credit Facility, which met our definition of complex technical accounting matters for which we should obtain technical accounting support from an outside expert.
−Removed: We identified and selected qualified third-party advisors, including validation that that the advisors possessed adequate knowledge to address the complexities of the applicable technical accounting matters;
−Removed: and ensured analyses were appropriately reviewed, ensuring consensus on accounting conclusions.
−Removed: Following the execution of our remediation plan for these transactions, management management has concluded that the material weakness has been remediated.
+Added: We identified and selected qualified third-party advisors, including validation that that the advisors possessed adequate knowledge to address the complexities of the applicable technical accounting matters, and we ensured analyses were appropriately reviewed, ensuring consensus on accounting conclusions.
+Added: Following the execution of our remediation plan for these transactions, management has concluded that the material weakness has been remediated.
Assessment of useful lives of recently acquired intangibles - We modified the useful life of our customer relationship intangible and recorded an immaterial cumulative effect true-up to release amortization expense during the three months ended June 30, 2024.
Following the execution of our remediation plan related to the useful lives of recently acquired intangible assets, management has concluded that the material weakness has been remediated.
−Removed: Information technology general controls - Management modified the reports used as source data to test change management controls in our enterprise resource planning tool and has established new controls to enhance our review of roles, particularly roles with the ability to add, edit or delete transactions.
−Removed: An insufficient number of quarters has elapsed to affirm remediation of the material weakness regarding information technology general controls;
−Removed: we will continue to perform our reviews in future quarters.
+Added: Information technology general controls ("ITGCs") - We have not yet remediated the material weakness related to ITGCs.
+Added: We believe that our existing user access review control over our ERP was not designed to operate at a precise enough level to appropriately identify the user groups tested in certain of our other logical access and change management controls.
+Added: Therefore, we have designed a new user access control regarding users of our ERP that will operate at a higher degree of precision compared with our existing user access control and will enhance our review of roles, particularly roles with the ability to add, edit or delete transactions.
+Added: Management has modified the reports used as source data to test change management and logical access controls in our enterprise resource planning tool, which we expect will allow us to conclude that the related controls are operating effectively by the end of fiscal year 2025.
+Added: We have engaged a third party specialist to assist in the remediation of our ITGCs.
Changes in Internal Control Over Financial Reporting
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This exclusion is in accordance with the Securities and Exchange Commission’s general guidance that an assessment of a recently acquired business may be omitted from our scope for one year from the date of acquisition.
−Removed: The Company's total assets as of June 30, 2024 include $113,500 of assets held by GKE.
−Removed: The Company's consolidated revenues for the three months ended June 30, 2024 include $6,300 from GKE.
−Removed: Other than as discussed above, during the three months ended June 30, 2024 there were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
+Added: GKE GmbH and Sal GmbH will be included in the scope of our assessment of our internal controls over financial reporting, and GKE China will be included for cash, in the third quarter of our fiscal year 2025.
+Added: The Company's total assets as of September 30, 2024 include $105,000 of assets held by GKE.
+Added: The Company's consolidated revenues for the three months ended September 30, 2024 include $5,863 from GKE.
+Added: Other than as discussed above, during the three months ended September 30, 2024 there were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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.