Item 4. Controls and Procedures
Item
4. Controls and Procedures
(a)
Disclosure Controls and Procedures
We
maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act
of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports filed
or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Commission’s
rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be
disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed, summarized and reported within the
time periods required by the Commission’s rules and forms.
We
carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer
(principal executive officer) and Corporate Controller (principal financial officer), of the effectiveness of the design
and operation of these disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of March 31, 2025.
Based on this evaluation, the Chief Executive Officer and Corporate Controller concluded that our disclosure controls and procedures
were not effective as of March 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q, due to the material weaknesses
described below.
15
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(b)
Management’s Report on Internal Control over Financial Reporting
Management
of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act.
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. Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness of internal control over financial reporting 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.
Management
has assessed the effectiveness of our internal control over financial reporting as of March 31, 2025. In making our assessment of the
effectiveness of internal control over financial reporting, management used the criteria set forth in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A
material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements
will not be prevented or detected on a timely basis. As a result of our evaluation of our internal control over financial reporting,
management identified the following material weaknesses in our internal control over financial reporting:
●
We
lacked a sufficient number of accounting professionals with the necessary knowledge, experience and training to adequately account
for significant, unusual transactions that have resulted in misapplications of GAAP, particularly with regard to equity financing
arrangements and the timing of recognition of certain non-cash charges. Additionally, we have not implemented processes to consistently
review for appropriate labor and overhead absorption to inventory and make timely adjustments to standard costs
●
We
are overly dependent upon certain personnel, including our Chief Executive Officer, to provide financial reporting oversight within
an environment that is highly manual in nature.
As
a result of the material weaknesses, we have concluded that we did not maintain effective internal control over financial reporting as
of March 31, 2025.
Plan
for Remediation of Material Weakness
Management
has enhanced its available resource base and adjusted its processes with respect to the areas listed above. Additional procedures are
in the process of being established and will be evaluated for effectiveness in the future. The Company views the combination of the Chief
Executive Officer and Corporate Controller will help in strengthening financial oversight, improving internal controls, and ensuring
continuity in leadership during this transitional period. On April 25, 2025, Frank Cesario notified the Board
of Directors of his resignation as Director, effective immediately, due to personal reasons. Mr. Cesario’s departure was not due
to any disagreement with the Company on any matter relating to its operations, policies, or practices. Mr. Cesario had been the Company’s
Principal Financial Officer until the date of his resignation. The Company recently hired a controller in March 2025 that management
believes has the requisite skillset and experience to improve segregation of duties and address accounting and reporting requirements
for significant, unusual transactions.
This
quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by its registered public accounting firm pursuant to the Dodd-Frank
Wall Street Reform and Consumer Protection Act, which permits the Company to provide only management’s report in this quarterly
report.
(c)
Changes in Internal Control over Financial Reporting
On
April 25, 2025, Frank Cesario notified the Broad of Directors of his resignation as Director, effective immediately, due to personal
reasons. Mr. Cesario’s departure was not due to any disagreement with the Company on any matter relating to its operations, policies,
or practices.
Other
than as described in the Plan for Remediation of Material Weakness section above relating to the departure of the Principal Financial
Officer and hiring of a Corporate Controller, there were no changes in our internal control over financial reporting, as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
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.