Item 4. Controls and Procedures
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f)
of the Exchange Act. Under the supervision and with the participation of our principal executive officer and principal financial officer
and oversight of the Audit Committee and the Board of Directors, we conducted an evaluation of the effectiveness of our internal control
over financial reporting based on criteria established in the framework set forth in Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Our
management, including our principal executive officer and principal financial officer, recognizes that internal controls over financial
reporting, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, have been detected. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the controls.
Based
on our evaluation, management identified material weaknesses in our internal control over financial reporting as of September 30, 2025,
as set forth below:
●
Ineffective
approval processes governing (i) timely Board of Directors authorization and (ii) segregation of duties and roles and responsibilities
configurations within the Company’s financial reporting system;
●
Inadequate
contract management process to capture all executed agreements prior to the commencement of services in order to ensure accuracy
within the proper accounting period;
●
Misapplication
of U.S. GAAP as evidenced by the restatement of our unaudited financial statements as of and for the three and nine months ended
September 30, 2023; and
●
Ineffective
disclosure controls and procedures a result of (i) lack of segregation of duties, (ii) lack of internal control structure review
and (iii) misapplication of U.S. GAAP.
In
order to remediate the identified material weaknesses, management, with the oversight of the Audit Committee of the Board of Directors,
undertook measures to enhance the Company’s internal control environment, including the (i) hiring of a principal financial officer
and other accounting personnel to ensure the appropriate application of U.S. GAAP including the annual required completion of a minimum
number of continuing professional education hours, (ii) hiring of a dedicated internal control manager that reports directly to the Audit
Committe and whose sole responsibility is to develop, document, implement and maintain our internal control framework and program including
walkthroughs, narratives, flow charts and independent testing of our financial and IT controls, (iii) documentation and communication
of business policies such as a delegation of authority over company transactions including the Board of Directors and invoice approvals,
(iv) completion of a formal monthly close process including account reconciliations with supporting documentation and (v) engagement
of a third-party firm that implemented controls to segregate duties and approvals along with the proper assignment of roles and responsibilities
within the Company’s financial system. However, management has not fully implemented the remediation steps and expects remediation
efforts, including testing, to continue in fiscal year 2025.
While
these remediation efforts are subject to ongoing management evaluation and will require validation and testing of the design and operating
effectiveness of the Company’s internal controls over a sustained period of financial reporting cycles, management is committed
to maintaining a strong internal control program over financial reporting and will take further actions and implement additional enhancements
or improvements as necessary.
Changes
in Internal Control Over Financial Reporting
Other
than the remediation efforts described above, there were no changes in our internal controls over financial reporting, as defined in
Rules 13a-15(f) of the Exchange Act, during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
27
PART
II - OTHER INFORMATION
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