Item 4. Controls and Procedures
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,”
as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure information required to be
disclosed in our reports that we file or furnish pursuant to the Exchange Act is recorded, processed, summarized, and reported within
the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer
(our principal financial officer), as appropriate to allow for timely decisions regarding required disclosure. Our management, with the
participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls
and procedures as of the end of the period covered by this report. Based on such evaluation, our principal executive officer and principal
financial officer have concluded that, as of such date, our disclosure controls and procedures were not effective at a reasonable assurance
level due to material weaknesses identified related to (1) the lack of a sufficient number of trained professionals with the expertise
to design, implement, and execute a formal risk assessment process and formal accounting policies, procedures, and controls over accounting
and financial reporting to ensure the timely and accurate recording of financial transactions while maintaining a segregation of duties;
and (2) the lack of a sufficient number of trained professionals with the appropriate technical expertise with United States generally
accepted accounting principles, or U.S. GAAP, to identify, evaluate, and account for complex transactions, including identification of
related party transactions, and review valuation reports prepared by external specialists.
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Changes in Internal Control over Financial
Reporting
In preparing our financial statements as of and
for the three months ended March 31, 2025, management identified material weaknesses in our internal control over financial reporting.
The material weaknesses we identified related to (1) the lack of a sufficient number of trained professionals with the expertise to design,
implement, and execute a formal risk assessment process and formal accounting policies, procedures, and controls over accounting and financial
reporting to ensure the timely and accurate recording of financial transactions while maintaining a segregation of duties; and (2) the
lack of a sufficient number of trained professionals with the appropriate U.S. GAAP technical expertise to identify, evaluate, and account
for complex transactions and review valuation reports prepared by external specialists.
As disclosed in the Form 10-K, our management
has identified the steps necessary to address the material weaknesses, and in the third quarter of fiscal year 2025, we continued to implement
the following remedial procedures. We are planning on implementing measures designed to improve our internal control over financial reporting
to remediate these material weaknesses, including formalizing our processes and internal control documentation and strengthening supervisory
reviews by our financial management and hiring additional qualified accounting and finance personnel and engaging financial consultants
to enable the implementation of internal control over financial reporting and segregating duties amongst accounting and finance personnel.
While we are implementing these measures, we cannot
assure you that these efforts will remediate our material weaknesses and significant deficiencies in a timely manner, or at all, or prevent
restatements of our financial statements in the future. If we are unable to successfully remediate our material weaknesses, or identify
any future significant deficiencies or material weaknesses, the accuracy and timing of our financial reporting may be adversely affected,
we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, and the market price
of our common stock may decline as a result.
In accordance with the provisions of the JOBS
Act, we and our independent registered public accounting firm were not required to, and did not, perform an evaluation of our internal
control over financial reporting as of March 31, 2025. Accordingly, we cannot assure you that we have identified all, or that we will
not in the future have additional, material weaknesses. Material weaknesses may still exist when we report on the effectiveness of our
internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act.
Inherent Limitations on Effectiveness of
Controls
Our management, including our principal executive
officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial
reporting will prevent all errors and all fraud. Our 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, and management necessarily is required
to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls
is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and not be detected.
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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.