Item 4. Controls and Procedures
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that 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. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not operating effectively as of March 31, 2026.
As of December 31, 2025, the Company identified the following material weaknesses which continue to exist as of March 31, 2026:
As previously disclosed, management has identified material weaknesses in the Company’s internal control over financial reporting primarily related to insufficient accounting resources and technical expertise to appropriately analyze and apply U.S. GAAP, as well as deficiencies in the design and implementation of business process controls, including those related to revenue recognition and sales tax, and information technology controls.
As a result of these material weaknesses, management concluded that the Company's internal control over financial reporting was not effective as of March 31, 2026. Management continues to evaluate and implement remediation measures designed to address these material weaknesses and strengthen the Company’s internal control environment.
Remediation Plan
Management is committed to remediating the material weaknesses in the Company’s internal control over financial reporting and has implemented and continues to implement measures designed to strengthen the control environment.
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These efforts include enhancing technical accounting resources, formalizing and expanding internal control procedures over financial reporting, and improving oversight and documentation of key control activities.
The Company has engaged external advisors to assist with technical accounting matters, including valuation analyses related to complex financial instruments and derivatives. In addition, the Company has implemented governance, risk, and compliance software to support control documentation, monitoring, and testing activities.
The Company also plans to further strengthen its control environment by adding personnel, improving segregation of duties, and enhancing information technology general controls, including controls over the Company’s enterprise resource planning systems. Management believes these actions will strengthen the Company’s internal control framework; however, the material weaknesses will not be considered remediated until the applicable controls have been designed, implemented, and are operating effectively for a sufficient period, and management has concluded, through testing, that the controls are operating effectively.
Management will continue to evaluate and refine its remediation efforts and perform additional analyses and procedures to ensure that the Company’s consolidated financial statements are prepared in accordance with U.S. GAAP while remediation activities remain in progress.
The existence of any material weakness or significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies, and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, and cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2026, that materially affect, or are reasonably likely to materially affect, our internal control over financial reporting, except as disclosed in “Remediation Plan” above.
PART II — OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
For information regarding legal proceedings at March 31, 2026, see Note 15 to the condensed consolidated financial statements, which information is incorporated herein by reference.
Item 1A. RISK FACTORS
There have been no material changes from our risk factors as previously reported in Part I, Item 1A “Risk Factors” in our 2025 Annual Report.
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.