Seneca Foods Corp 10-K/A

Item 9A. Controls and Procedures   Evaluation of Disclosure Controls and Procedures   Prior to the filing of our Form 10-K for the fiscal year ended March 31, 2023 (the “Original Filing”), our management, with the participation of our Principal Executive Officer and Co-Principal Financial Officers, evaluated 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 March 31, 2023. Based upon this evaluation, our Principal Executive Officer and Co-Principal Financial Officers concluded that, as of March 31, 2023, the Company’s disclosure controls and procedures: (1) were designed to ensure that material information relating to the Company is made known to our Principal Executive Officer and Co-Principal Financial Officers by others within those entities, particularly during the period in which this report was being prepared, so as to allow timely decisions regarding required disclosure and (2) were effective, in that they provide reasonable assurance that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.   Subsequent to this evaluation and conclusion, on July 25, 2023, we reported that we had identified an error related to our accounting for valuing inventory using the LIFO method. As a result of this error, our Principal Executive Officer and Principal Financial Officer have now concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of March 31, 2023, solely as a result of the material weakness identified in Management's Report on our Internal Control over Financial Reporting related to accounting for valuing inventory using the LIFO method as discussed below.   Management ’ s Annual Report on Internal Control Over Financial Reporting   Our management is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   Prior to the filing of our Original Filing, our management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2023. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, our management believed that, as of March 31, 2023, our internal control over financial reporting was effective based on those criteria. Subsequently, we identified a material weakness in our internal control over financial reporting relating to the accounting for valuing inventory using the LIFO method. Specifically, the review controls in place with respect to a year-end adjustment to the calculation of the LIFO reserve were not effective. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness in our internal controls resulted in the restatement of our fiscal 2023 and 2022 financial statements included in this report. As a result, management has now concluded that our internal control over financial reporting was not effective as of March 31, 2023, based on the COSO criteria.   Plante Moran, P.C., an independent registered public accounting firm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K/A and, as part of its audit, has issued an attestation report, included herein, on the effectiveness of our internal control over financial reporting.   Changes in Internal Control over Financial Reporting   The material weakness described above, which related to the accounting for valuing inventory using the LIFO method, was identified after the end of the period covered by the Original Filing. We have implemented certain remedial measures including the installation of software to recalculate the LIFO reserve and also provide analytic features to identify potential abnormalities in the underlying data coupled with strengthening our review controls with improved documentation standards, technical oversight and training to ensure the accounting valuing inventory was in compliance with U.S. generally accepted accounting principles. The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.   Except as otherwise discussed above, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses.   40     Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting   To the Stockholders and Board of Directors of Seneca Foods Corporation   Opinion on Internal Control over Financial Reporting   We have audited the internal control over financial reporting as of March 31, 2023 of Seneca Foods Corporation (the “Company”), based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”). In our opinion, because of the effect of the material weakness described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of March 31, 2023, based on criteria established in the COSO framework.   In our report dated June 13, 2023, we expressed an unqualified opinion on the Company’s internal control over financial reporting. The material weakness described below was subsequently identified in connection with the restatement of the Company’s previously issued consolidated financial statements. Accordingly, management has revised its assessment about the effectiveness of the Company’s internal control over financial reporting, and our present opinion on the effectiveness of the Company’s internal control over financial reporting as of March 31, 2023, as expressed herein, is different from that expressed in our previous report. The material weakness was considered in connection with the aforementioned restatement, and this report does not affect our opinion on the Company’s consolidated financial statements.   A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management identified a deficiency in its review controls related to the Company’s valuation of inventory under the LIFO method.     We also have audited the accompanying consolidated balance sheets of the Company as of March 31, 2023 and 2022, the related consolidated statements of net earnings, comprehensive income (loss), stockholders' equity, and cash flows for each of the years in the three-year period ended March 31, 2023, and the related notes (collectively referred to as the “financial statements”), in accordance with the standards of the Public Company Accounting Oversight Board (United States). The material weakness described above was considered in connection with the aforementioned restatement and in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2023 financial statements, and this report does not affect our report dated June 13, 2023 (except for the effect of the restatement disclosed in Notes 2 and 5, as to which the date is July 31, 2023), which expressed an unqualified opinion on those financial statements.   Basis for Opinion   The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Item 9A, Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.   Definition and Limitations of Internal Control over Financial Reporting   A company's 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 generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.   Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.     /s/ Plante Moran, P.C.     We have served as the Company’s auditor since 2019.   Southfield, Michigan           June 13, 2023 (except for the material weakness described above as to which the date is July 31, 2023)                41     PART IV   Item 15. Exhibits and Financial Statement Schedu   A. Exhibits, Financial Statements, and Supplemental Schedule     1. Financial Statements – the following consolidated financial statements of the Registrant, , are incorporated by reference in Part II, Item 8 “Financial Statements and Supplementary Data”:     a. Consolidated Statements of Net Earnings – Years ended March 31, 2023, 2022, and 2021     b. Consolidated Statements of Comprehensive Income (Loss) – Years ended March 31, 2023, 2022, and 2021     c. Consolidated Balance Sheets – As of March 31, 2023 and 2022     d. Consolidated Statements of Cash Flows – Years ended March 31, 2023, 2022, and 2021     e. Consolidated Statements of Stockholders’ Equity – Years ended March 31, 2023, 2022, and 2021     f. Notes to Consolidated Financial Statements – Years ended March 31, 2023, 2022, and 2021     g. Reports of Independent Registered Public Accounting Firm (PCAOB ID 6581 )     2. Supplemental Schedule:     a. Report of Independent Registered Public Accounting Firm on Schedule     b. Schedule II—Valuation and Qualifying Accounts   Other schedules have not been filed because the conditions requiring the filing do not exist or the required information is included in the consolidated financial statements, including the notes thereto.   Exhibit Number Description         3.1 The Company’s Restated Certificate of Incorporation, (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated August 11, 2010)         3.2 The Company’s Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q/A for the quarterly period ended July 1, 1995 filed with the SEC on August 18, 1995)         3.3 Amendment to the Company’s Bylaws (incorporated by reference to Exhibit 3 to the Company’s Current Report on Form 8-K dated November 6, 2007)         4.1 Description of Capital Stock (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019)         10.1 Fourth Amended and Restated Loan and Security Agreement dated as of March 24, 2021 by and among Seneca Foods Corporation, Seneca Foods, LLC, Seneca Snack Company, Green Valley Foods, LLC and certain other subsidiaries of Seneca Foods Corporation, the financial institutions party thereto as lenders, as agent, issuing bank, and syndication agent, and BofA Securities, Inc. as lead arranger (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 26, 2021)         10.2 First Amendment to Fourth Amended and Restated Loan and Security Agreement dated as of September 14, 2022 by and among Seneca Foods Corporation, Seneca Foods, LLC, Seneca Snack Company, Green Valley Foods, LLC and certain other subsidiaries of Seneca Foods Corporation, the financial institutions party thereto as lenders, as agent, issuing bank, and syndication agent, and BofA Securities, Inc. as lead arranger (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended October 1, 2022, filed with the SEC on November 9, 2022)         10.3 Second Amended and Restated Loan and Guaranty Agreement as of January 20, 2023 by and among Seneca Foods Corporation, Seneca Foods, LLC, Seneca Snack Company, Green Valley Foods, LLC and certain other subsidiaries of Seneca Foods Corporation and Farm Credit East, ACA (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 26, 2023)   42       10.4 Amendment 1 to Second Amended and Restated Loan and Guaranty Agreement as of May 23, 2023 by and among Seneca Foods Corporation, Seneca Foods, LLC, Seneca Snack Company, Green Valley Foods, LLC and certain other subsidiaries of Seneca Foods Corporation and Farm Credit East, ACA (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 30, 2023         10.5 Indemnification Agreement between the Company and the directors of the Company (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 26, 2020, filed with the SEC on November 4, 2020)         10.6* Amended and Restated Seneca Foods Corporation Executive Profit Sharing Bonus Plan (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the SEC on June 10, 2022)     10.7* Amended and Restated Seneca Foods Corporation Manager Profit Sharing Bonus Plan (incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the SEC on June 10, 2022)         10.8* 2007 Equity Incentive Plan effective August 3, 2007 as extended on July 28, 2017 (incorporated by reference to Appendix A to the Company’s Proxy Statement dated June 28, 2007)         10.9* Seneca Foods Corporation Division Management Bonus Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 5, 2020)         10.10*  Executive Transition Services Agreement dated as of August 31, 2020 between the Company and Kraig H. Kayser (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 26, 2020, filed with the SEC on November 4, 2020)         10.11* Supplemental Retirement Agreement between Seneca Foods Corporation and Kraig H. Kayser (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 26, 2020, filed with the SEC on November 4, 2020)         10.12* Supplemental Retirement Agreement between Seneca Foods Corporation and Timothy J. Benjamin (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 11, 2021)         21 List of Subsidiaries (incorporated by reference to Exhibit 21 of the Company’s Annual Report on Form 10-K filed with the SEC on June 13, 2023)         23.1 Consent of Plante Moran, P.C. (filed herewith)         31.1 Certification of Paul L. Palmby as Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)         31.2 Certification of Michael S. Wolcott as Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)         32 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)     101.INS Inline XBRL Instance Document (filed herewith).   101.1.SCH Inline XBRL Taxonomy Extension Calculation Schema Document (filed herewith)   101.2.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)   101.3.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)   101.4.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)   101.5 Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)   104 Cover page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) (filed herewith)   * Indicates management or compensatory agreement   43     SIGNATURES   Pursuant to the requirements of Section 13 or 15 (d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   SENECA FOODS CORPORATION     By: /s/ Michael S. Wolcott                     Michael S. Wolcott Senior Vice President, Chief Financial Officer and Treasurer   July 31, 2023    44       Schedule II VALUATION AND QUALIFYING ACCOUNTS (In thousands)   Seneca Foods Corporation and Subsidiaries               Charged/                       Balance       Balance at     (credited)     Charged to     Deductions       at end       beginning     to income     other     from       of period       of period     (Restated)     accounts     reserve       (Restated)   Year-ended March 31, 2023:                                           Allowance for doubtful accounts   $ 54     $ ( 20 )   $ -     $ -   (a)   $ 34   Income tax valuation allowance   $ 3,931     $ 1,076     $ -     $ -       $ 5,007                                               Year-ended March 31, 2022:                                           Allowance for doubtful accounts   $ 339     $ ( 291 )   $ -     $ ( 6 ) (a)   $ 54   Income tax valuation allowance   $ 4,674     $ ( 743 )   $ -     $ -       $ 3,931                                               Year-ended March 31, 2021:                                           Allowance for doubtful accounts   $ 1,598     $ (1,304 )   $ -     $ (45 ) (a)   $ 339   Income tax valuation allowance   $ 4,473     $ 201     $ -     $ -       $ 4,674     (a) Accounts written off, net of recoveries.   45       Report of Independent Registered Public Accounting Firm    Board of Directors and Stockholders Seneca Foods Corporation Fairport, New York   The audit referred to in our report dated June 13, 2023 (except for the effect of the restatement disclosed in Notes 2 and 5, as to which the date is July 31, 2023) relating to the consolidated financial statements of Seneca Foods Corporation also included the audit of the consolidated financial statement schedule listed in the accompanying index. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this consolidated financial statement schedule based on our audit.   In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.     /s/ Plante Moran, P.C.   We have served as the Company’s auditor since 2019.   Southfield, Michigan June 13, 2023 (except for the March 31, 2023 income tax valuation allowance as to which the date is July 31, 2023)     46