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Item 4. Controls and Procedures

2025-06-16 compared with 2025-01-23 · 64 added, 103 removed, 17 unchanged (91% of the section changed)

Controls and Procedures

controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our

reports filed or submitted under the Securities Exchange Act of 1934, as amended (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 our management, including our Chief Executive Officer and Chief Financial Officer,

to allow timely decisions regarding required disclosure.

of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures

that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange

Act of 1934, as amended (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 our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our

Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”) carried out an evaluation of the effectiveness

of the design and operation of our disclosure controls and procedures as of September 30, 2024.

of the design and operation of our disclosure controls and procedures as of March 31, 2025.

Based on this evaluation, our Chief Executive

Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30,

Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2025

due to a material weaknesses in our internal controls over financial reporting (“ICFR”).

4 unchanged sentences

statement elements, and recording incorrect journal entries that also did not have the sufficient review and approval.

Notwithstanding

the identified material weaknesses, management, including the Certifying Officers, believes that the financial statements contained in

this Form 10-Q filing fairly present, in all material respects, our financial condition, results of operations and cash flows for the

periods presented in conformity with GAAP.

weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a

reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented

or detected on a timely basis.

While preparing the second quarter 2024 financial statements we identified

internal control failures over our review of accounts payable, accrued liabilities, stock compensation, and revenue cutoff that resulted

in material errors being reported in (i) our previously issued financial statements for the fiscal year ended December 31, 2023 and 2022

included in the Company’s Form 8-K as filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2024

and as amended on March 25, 2024 (the “Form 8-K”);

(ii) the Company’s unaudited interim financial statements for the

three months ended March 31, 2024, included in the Quarterly Report on Form 10-Q as filed with the SEC on May 16, 2024;

and (iii) the

financial statements noted in items (i) and (ii) above included in the Company’s Registration Statement on Form S-1, which was declared

effective by the SEC on May 31, 2024.

The Company has corrected these errors in an amendment to (i) the Form 8-K, filed on August 19,

2024, and (ii) an amendment to its Current Report on Form 10-Q for the quarterly period ended March 31, 2024 filed on August 19, 2024.

While preparing the third quarter 2024 financial statements we identified

internal control failures over our review of revenue and related cost of goods sold cutoff, expense classification, prepaid expenses,

operating lease cash flow classification and accounting for finance lease arrangements that resulted in material errors being reported

in (i) our previously issued financial statements for the fiscal years ended December 31, 2023 and 2022 included in the Company’s

Form 8-K as filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2024 and as amended on March 25, and

August 19, 2024 (the “8-K”), (ii) the Company’s unaudited condensed consolidated interim financial statements for the

three months ended March 31, 2024 included in the Quarterly Report on Form 10-Q/A as filed with the SEC on August 19, 2024 (the “Q1

10-Q”), (iii) the Company’s unaudited condensed consolidated interim financial statements for the three and six months ended

June 30, 2024 included in the Quarterly Report on Form 10-Q as filed with the SEC on August 19, 2024 (the “Q2 10-Q”, and together

with the Q1 10-Q, the “10-Qs”) and (iv) the financial statements noted in items (i) through (iii) above included in the Company’s

Registration Statement on Form S-1, as amended (the “S-1”), which was declared effective by the SEC on October 1, 2024.

Company has corrected these errors in an amendment to (i) the Form 8-K, filed on January 23, 2025, (ii) an amendment to its Current Report

on Form 10-Q for the quarterly period ended March 31, 2024, filed on January 23, 2025 and (iii) an amendment to its Current Report on

Form 10-Q for the quarterly period ended June 30, 2024, filed on January 23, 2025.

These control deficiencies could result in a misstatement in our accounts

or disclosures that would result in a material misstatement to our financial statements that would not be prevented or detected.

we determined that these control deficiencies constitute material weaknesses.

We are in the early stages of designing and implementing a plan to

remediate the material weaknesses identified.

Management has considered and reviewed the errors which occurred in

revenue and cost of goods sold cutoff, accounts payable, accrued liabilities, stock compensation, expense classification, prepaid expenses,

operating lease cash flow classification and accounting for finance lease arrangements.

Management has determined that controls are not

designed effectively in these areas.

To mitigate future misstatements in these areas management will implement the following procedures

at the end of each reporting period:

Notwithstanding the identified material weaknesses, management, including

the Certifying Officers, believes that the financial statements contained in this Form 10-Q filing fairly present, in all material respects,

our financial condition, results of operations and cash flows for the periods presented in conformity with GAAP.

Material Weakness

A material weakness is a deficiency, or a combination of control deficiencies,

in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or

interim consolidated financial statements will not be prevented or detected on a timely basis.

As previously disclosed, a material weakness exists

in the Company’s internal control over financial reporting related to ineffective controls over period end financial disclosure

and reporting processes, including not timely performing certain reconciliations and the completeness and accuracy of those reconciliations,

and lack of effectiveness of controls over accurate accounting and financial reporting and reviewing the underlying financial statement

elements, and recording incorrect journal entries that also did not have the sufficient review and approval.

The control deficiencies

resulted in and could result in a future misstatement in our accounts or disclosures that would result in a material misstatement

to our financial statements that would not be prevented or detected.

Accordingly, we determined that these control deficiencies constitute

material weaknesses.

We are in the early stages of designing and implementing

a plan to remediate the material weaknesses identified.

Our plan includes the below:

Designing and implementing a risk assessment process supporting the identification of risks.

Implementing systems and controls to enhance our review of significant accounting transactions and other new technical accounting and financial reporting issues and preparing and reviewing accounting memoranda addressing these issues.

Improving our internal control policies and procedures to specifically address controls around segregation of duties, cybersecurity, user access reviews, and changes in management.

Implementing specific user access, segregation of duties and change management controls within our financial reporting IT systems.

Hiring additional experienced accounting, financial reporting and internal control personnel and changing roles and responsibilities of our personnel as we transition to being a public company and are required to comply with Section 404 of the Sarbanes-Oxley Act (“ Section 404 ”).

We are in the process of hiring additional resources and we are engaging with a third-party consulting firm to assist us with our formal internal control plan and to provide accounting services related to complex accounting transactions.

Implementing controls to enable an effective and timely review of period-end close procedures.

Implementing controls to enable an accurate and timely review of accounting records that support our accounting processes and maintain documents for internal accounting reviews.

Management has considered and reviewed the errors

which occurred in revenue and cost of goods sold cutoff, accounts payable, accrued liabilities, stock compensation, expense classification,

prepaid expenses, operating lease cash flow classification and accounting for finance lease arrangements.

Management has determined that

controls are not designed effectively in these areas.

To mitigate future misstatements in these areas management will implement the following

procedures at the end of each reporting period:

Accounts Payable - Review the accounts payable with the executive team to inquire about any invoices not sent to accounts payable.

Accrued Liabilities - Review the accrued liabilities detail with the

executive team to determine if there are any expenses/liabilities for which the company should accrue an expense which has not yet been

Stock Compensation - Review with the CEO and Legal Counsel the list

of stock grants which have been made and ask if there have been any other grants made (paper issued to employees or vendors) which should

be included in the analysis.

Accrued Liabilities - Review the accrued liabilities detail with the executive team to determine if there are any expenses/liabilities for which the company should accrue an expense which has not yet been recognized.

Stock Compensation - Review with the CEO and legal counsel the list of stock grants which have been made and ask if there have been any other grants made (paper issued to employees or vendors) which should be included in the analysis.

Classification of expenses - Review the expense classification with the executive team to determine all expenses are properly classified.

Classification of financing agreements - Review the financing agreements

with the executive team to determine proper classification of the agreements as debt or finance lease.

Prepaid expenses – Review prepaid expenses with the executive team to determine if all prepaid expenses have been properly recorded for future services to be rendered and subsequently amortized.

Classification of financing agreements - Review the financing agreements with the executive team to determine proper classification of the agreements as debt or finance lease.

expenses - Review prepaid expenses with the executive team to determine if all prepaid expenses have been properly recorded for

future services to be rendered and subsequently amortized.

Revenue and cost of goods sold cut off - Review revenue and related cost of goods sold with executive team to determine if revenue and related cost of goods sold is properly recognized.

We cannot assure you that these measures will remediate the material

weaknesses described above.

The implementation of these remediation measures is in the early stages and will require validation and testing

of the design and operating effectiveness of our internal controls over a sustained period of financial reporting cycles and, as a result,

the timing of when we will be able to fully remediate the material weaknesses is uncertain.

If the steps we take do not remediate the

material weaknesses in a timely manner, there could be a reasonable possibility that these control deficiencies or others may result in

a material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely basis.

in turn, could jeopardize our ability to comply with our reporting obligations, limit our ability to access the capital markets and adversely

impact our stock price.

Implementing any appropriate changes to our internal controls may distract

our officers and employees, entail substantial costs to modify our existing processes and take significant time to complete.

These changes

may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent

inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business.

investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements

on a timely basis may harm our stock price and make it more difficult for us to effectively market and sell our products and services

to new and existing customers.

If we identify future deficiencies in our internal control over financial

reporting or if we are unable to comply with the demands that will be placed upon us as a public company, including the requirements of

Section 404 of the Sarbanes-Oxley Act, in a timely or effective manner, we may be unable to accurately report our financial results, or

report them within the timeframes required by the SEC.

We also could become subject to sanctions or investigations by the SEC or other

regulatory authorities.

In addition, if we are unable to assert that our internal control over financial reporting is effective, or if

our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over

financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports, we may face

restricted access to the capital markets and our stock price may be adversely affected.

Our current controls and any new controls that we develop may also

become inadequate because of poor design or changes in our business, including increased complexity resulting from any international expansion,

and weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.

Any failure to

develop or maintain effective controls or any difficulties encountered in their implementation or improvement could cause us to fail to

meet our reporting obligations, result in a restatement of our financial statements for prior periods, undermine investor confidence in

us and adversely affect the trading price of our common stock.

In addition, if we are unable to continue to meet these requirements, we

may not be able to remain listed on Nasdaq.

in Internal Control Over Financial Reporting

We cannot assure you that these measures will

remediate the material weaknesses described above.

The implementation of these remediation measures is in the early stages and will require

validation and testing of the design and operating effectiveness of our internal controls over a sustained period of financial reporting

cycles and, as a result, the timing of when we will be able to fully remediate the material weaknesses is uncertain.

If the steps we take

do not remediate the material weaknesses in a timely manner, there could be a reasonable possibility that these control deficiencies or

others may result in a material misstatement of our annual or interim financial statements that would not be prevented or detected on

a timely basis.

This, in turn, could jeopardize our ability to comply with our reporting obligations, limit our ability to access the

capital markets and adversely impact our stock price.

Changes in Internal Control Over Financial Reporting

Other than the above, there was no change in our internal control over

financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarterly period ending September

financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarterly period ending March 31,

2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

to June 30, 2024, the Company began working on their remediation plan as described above.

II - OTHER INFORMATION

PART II - OTHER INFORMATION

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