What changed in this filing

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Item 4. Controls and Procedures

2024-05-07 compared with 2023-11-15 · 42 added, 48 removed, 2 unchanged (98% of the section changed)

CONTROLS AND PROCEDURES

of Disclosure Controls and Procedures

As of the end of the period

covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”)

and Chief Financial Officer (“CFO” and together with the CEO, the “Certifying Officers”), we evaluated the effectiveness

of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities

Exchange Act of 1934, as amended (the “Exchange Act”)).

Disclosure controls and procedures are controls and other procedures

designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed,

summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include,

without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted

under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar

functions, as appropriate, to allow timely decisions regarding required disclosure.

Based upon this evaluation,

and the above criteria, our Certifying Officers concluded that the Company’s disclosure controls and procedures were not effective

as of September 30, 2023, at the reasonable assurance level due to a material weakness in our internal control over financial reporting,

described below, relating to errors in our accounting for warranty reserves.

in Internal Controls Over Financial Reporting.

Our internal control over

financial reporting did not identify an error in the accounting of our warranty reserves, relating to wholesale contracts.

our CEO and CFO have concluded that we did not maintain effective internal control over financial reporting, due to a material weakness

in our internal control over financial reporting, described below, related to errors in our accounting for warranty reserves.

In October 2023, we determined that we had not properly accounted for

the warranty terms specified in contracts with our wholesale customers when estimating the liability for warranty related returns.

As a result, our warranty reserves relating to wholesale customers were understated.

We determined the impact of this error on our previously

issued financial statements was immaterial, but that the cumulative effect would be material, if left uncorrected, in the current period.

Therefore, we elected to correct these errors in our financial statements as of and for the three and nine months ending September 30,

2023 included in this Quarterly Report on Form 10-Q by adjusting prior period financial statements.

In response to this material

weakness in internal control over financial reporting related to the accounting of our warranty reserves, we will implement a new control

to assess all wholesale customer contracts to ensure the terms contained therein are accounted for properly.

Our plans include increased

training and communication among our personnel regarding the appropriate consideration and application of contractual terms, including

legal to review all significant contracts and implementing new processes over credit memo approvals.

Our remediation plan can only be

accomplished over time and will be continually reviewed to determine that it is achieving its objectives.

We can offer no assurance that

these initiatives will ultimately have the intended effects.

Other than as described above

relating to the material weakness we identified, there were no changes in our internal control over financial reporting during the quarter

ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and

with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”

and together with the CEO, the “Certifying Officers”), we evaluated the effectiveness of the design and operation of our disclosure

controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act).

Our disclosure controls and procedures are

designed to provide reasonable assurance that the information required to be disclosed in our reports filed or submitted under the Exchange

Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Therefore, even those

systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Disclosure controls and

procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports

filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons

performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Based upon this evaluation, and the above criteria, our Certifying

Officers concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2024, due to the material

weakness in our internal control over financial reporting, described below.

Previously Reported Material Weakness

As previously reported, we

identified a material weakness related to the review and evaluation of wholesale customer contracts, specifically as it relates to variable

consideration, including wholesale warranty obligations.

Specifically, we did not design and maintain effective controls over the review

and evaluation of the accounting relating to contract terms agreed upon with our wholesale customers and the identification and calculation

of the related wholesale accrued warranty liabilities.

Plans for Remediation of Material Weakness

In response to the material

weakness, we have designed and implemented a control over the review of all wholesale customer contracts to ensure the terms contained

therein are appropriately evaluated and recorded.

This control includes increased rigor and participation among our legal and accounting

personnel regarding the appropriate consideration and application of contractual terms.

We are also implementing a new control over credit

memo review and approval.

Further, we are implementing a new control over the evaluation and review of accrued wholesale warranty liabilities.

The Company will not be able to fully remediate this material weakness until these steps have been completed and have been operating effectively

for a sufficient period of time.

The Company may also identify additional measures that may be required to remediate the material weakness

in the Company’s internal control over financial reporting, necessitating further action.

(b) Changes in Internal Controls Over Financial

Other than the remediation efforts described above, there were no changes

in our internal control over financial reporting during the quarter ended March 31, 2024 that have materially affected, or are reasonably

likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

LEGAL PROCEEDINGS

The Company is from time to

time involved in various claims, legal proceedings and complaints arising in the ordinary course of business.

Please refer to Note 15

— Commitments and Contingencies to the condensed consolidated financial statements contained in this report for certain information

regarding our legal proceedings.

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.

What changed 10-Q

Item 4. Controls and Procedures