Item 4. Controls and Procedures
Item 4. Controls and Procedures.
Management’s Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer, who is our principal
executive officer, and our Chief Financial Officer, who is our principal financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures, including internal control
over financial reporting, were effective as of September 30, 2024, to ensure the information we are required to disclose in reports that
we file or submit under the Securities Exchange Act of 1934, as amended (i) is recorded, processed, summarized, and reported within the
time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management,
including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Our disclosure controls and procedures are intended to be designed to provide reasonable assurance that such information is accumulated
and communicated to our management.
Material Weaknesses Previously Identified
and Remediation Status
As disclosed in our Form 10-K for the fiscal year
ending June 30, 2024, we did not properly value our raw material and work-in-process inventory resulting in an overstatement of inventory
and an understatement of cost of goods sold in the amount of $320,000. We used a manually updated spreadsheet to maintain our records
of quantities and costs in inventory, prior to transitioning to a new ERP system. The new ERP system was not properly updated to reflect
current costs, and proper units of measure for certain items in inventory. During the period ending September 30, 2024, we conducted a
thorough review of inventory item costs, updating incorrect item costs and units of measure in the new ERP system, established a methodology
and now continually monitor changes in costs through an analysis of purchase price variances and customer margin analysis.
Additionally, we realized during the preparation
of the financial statements for the fiscal year ended June 30, 2024 that we did not properly expense certain research and development
costs totaling $147,000 which was corrected prior to the filing of our financial statements on Form 10-K for the fiscal year ending June
30, 2024. We erroneously believed certain research and development costs were allowed to be capitalized under GAAP. The remediation of
this material weakness was completed effective September 30, 2024.
Changes in Internal Control over Financial
Reporting
Except for the material weaknesses and remediation
discussed above, there was no change in our internal control over financial reporting that occurred during the period covered by this
Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
19
PART II. OTHER INFORMATION
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.