Item 1A. Risk Factors
Item 1A. Risk Factors
In addition to the other
information set forth elsewhere in this Report, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors”
of the Company’s Annual Report on Form 10-K for the year ended September 30, 2025. Such factors, if they were to occur, could
cause our actual results to differ materially from those expressed in our forward-looking statements in this Report, and materially adversely
affect our financial condition or future results. Although we are not aware of any other factors that we currently anticipate will cause
our forward-looking statements to differ materially from our future actual results, or materially affect the Company’s financial
condition or future results, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial
might materially adversely affect our actual business, financial condition and/or operating results.
Our management has identified certain
internal control deficiencies, which management believes constitute material weaknesses. Our failure to establish and maintain an effective
system of internal controls has caused, and could continue to cause material misstatements of our financial statements or cause us to
fail to meet our reporting obligations or fail to prevent fraud in which case, our stockholders could lose confidence in our financial
reporting, which would harm our business and could negatively impact the price of our common stock .
We review and update our internal controls,
disclosure controls and procedures, and corporate governance policies as our Company continues to evolve. In addition, we are required
to comply with the internal control evaluation and certification requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“ SOX ”)
and management is required to report annually on our internal control over financial reporting. Our independent registered public accounting
firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section
404 of SOX until the date we are no longer a “smaller reporting company” as defined by applicable SEC rules.
Our management’s evaluation of the effectiveness
of our internal controls over financial reporting as of September 30, 2025 concluded that our controls were not effective, due to a material
weakness resulting from an ineffective overall control environment. The material weakness stems primarily from our small size and includes
the inability to maintain appropriate segregation of duties. In addition, the restatement of our unaudited condensed financial statements
for the three months ended March 31, 2026 identified a further material weakness related to ineffective controls over revenue recognition,
specifically with respect to the review of customer purchase order modifications and related shipping documentation.
Such shortcomings could have an adverse effect
on our business and financial results. Any system of internal controls, however well designed and operated, is based in part on certain
assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention
of the controls and procedures or failure to comply with regulations concerning controls and procedures could have a material effect on
our business, results of operations and financial condition. Any of these events could result in an adverse reaction in the financial
marketplace due to a loss of investor confidence in the reliability of our financial statements, which ultimately could negatively affect
the market price of our shares, increase the volatility of our stock price and adversely affect our ability to raise additional funding.
The effect of these events could also make it more difficult for us to attract and retain qualified persons to serve on our Board and
as executive officers.
Subject to limitations on liquidity, the Company
is planning to take steps to remediate these material weaknesses. However, we cannot assure you that any of the measures we implement
to remedy any such deficiencies will effectively mitigate or remedy such deficiencies.
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