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 SEC, 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 Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our
disclosure controls and procedures as of December 31, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that, as of such date, our disclosure controls and procedures were not effective at a reasonable assurance level
due to the material weaknesses in internal control over financial reporting described in Item 9A “Controls and Procedures”
of the Form 10-K, which we are still in the process of remediating as of December 31, 2025. Investors are directed to Item 9A of the
Form 10-K for the description of these weaknesses. Notwithstanding the identified material weaknesses, management, including our Chief
Executive Officer and Chief Financial Officer, believes the unaudited condensed consolidated financial statements included in this report
fairly represent, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented
in accordance with United States generally accepted accounting principles.
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Changes
in Internal Control over Financial Reporting
We
regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls
and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities
as implementing new, more efficient systems, consolidating activities, and migrating processes.
Other
than in connection with the remedial measures described below, 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 the period covered by this report that have materially affected
or are reasonably likely to materially affect our internal control over financial reporting.
As
disclosed in the Form 10-K, our management has identified the steps necessary to address the material weaknesses, and in the second quarter
of fiscal year 2026, 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 class B common stock may decline as a result.
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.
32
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.