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Also, 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.
−Removed: Our management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2023, based on the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: Based on the results of this evaluation, the Company’s management concluded that internal control over financial reporting was not effective as of June 30, 2023, due to the material weakness listed below.
+Added: Our management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023, based on the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
+Added: Based on the results of this evaluation, the Company’s management concluded that internal control over financial reporting was not effective as of September 30, 2023, due to the material weakness listed below.
A material weakness is a deficiency, or a combination of deficiencies, in ICFR, 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.
−Removed: Management identified a material weakness in its internal control over financial reporting at December 31, 2022, over our inventory process which still exists as of June 30, 2023.
+Added: Management identified a material weakness in its internal control over financial reporting at December 31, 2022, over our inventory process which still exists as of September 30, 2023.
Specifically, we have identified issues related to:
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• We have hired additional management with a focus on inventory control and inventory best practices.
+Added: • We are taking steps to limit the amount of inventory held outside of centralized warehouses.
• We have improved and enforced our formalized inventory count and inventory adjustment processes which includes taking steps to reinforce the inventory taking procedures, proper training and supervision of warehouse staff.
• We have added additional inventory safeguards in our warehouses limiting physical access to our inventory.
−Removed: • We have limited the number of employees who can make inventory adjustments in our accounting software by adding additional IT controls.
+Added: • We have limited the number of employees who can make inventory adjustments in our accounting software by adding additional IT controls around inventory transfers.
• We have engaged a third-party consultant to conduct a full assessment of our controls and procedures.
• We intend to continue efforts to ensure our employees understand the ongoing importance of internal controls and compliance with corporate policies and procedures.
+Added: • We have added a highly qualified new member to our board of directors and expanded our audit committee
While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, we are committed to the continuous improvement of our internal control over financial reporting and will continue to diligently review our internal control over financial reporting.
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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.