Item 4. Controls and Procedures
ITEM
4. CONTROLS AND PROCEDURES
Disclosure
Controls and Procedures
As
required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Our
disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in
reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer
and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, and is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our principal
executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the
end of the period covered by this quarterly report, at the reasonable assurance level.
The
material weaknesses identified, and the related remediation plan are more fully described in our 2024 Form 10-K and Form 10-K/A for
the fiscal year ended 2024, filed with the SEC on March 13, 2025. The material weaknesses, summarized in the bullet points below, relate to
the fact that we did not design and maintain accounting policies, procedures and controls to ensure complete, accurate and timely
financial reporting in accordance with U.S. GAAP. Specifically, the material weaknesses identified included the following:
●
We did not design and maintain formal accounting policies,
procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over
the preparation and review of account reconciliations, journal entries and classification of certain costs;
24
●
We had not developed and effectively communicated to
our employees our accounting policies and procedures, which resulted in inconsistent practices. Since these entity level programs have
a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness;
●
We do not have sufficient, qualified finance and accounting
staff with the appropriate U.S. GAAP technical accounting expertise to identify, evaluate and account for accounting and financial reporting,
and effectively design and implement systems and processes that allow for the timely production of accurate financial information in accordance
with internal financial reporting timelines. As a result, we did not design and maintain formal accounting policies, processes and controls
related to complex transactions necessary for an effective financial reporting process; and
●
As a high-growth, smaller reporting company that became responsible for listed financial reporting, we have a limited
staff and budget available to adequately test and monitor the effectiveness of certain internal controls.
Management’s Annual Report on Internal
Control over Financial Reporting
Management is responsible for
establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
The information set forth under
“—Material Weaknesses” above is incorporated herein by reference.
Management, under the supervision of our principal
executive officer and our principal financial officer, conducted an evaluation of the effectiveness of internal controls over financial
reporting based on the framework in 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting
was not effective as of the period covered by this quarterly report.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting during the six months ended March 31, 2025, that have materially affected
or are reasonably likely to materially affect, our internal control over financial reporting, including any corrective actions regarding
significant deficiencies and material weaknesses.
Limitations
on Effectiveness of Controls and Procedures
In
designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design
of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply
its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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.