Company: TOGIW
Filing Date: 2025-04-23
Form Type: 10-K
Source: 0001214659-25-006296
Chunk: 50

Company: TurnOnGreen, Inc.
Filing Date: 2025-04-23
Form: 10-K
Item: Item 1A
Chunk 50
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 as defined under Section 404 of SOX, we may be unable to produce reliable financial
reports or prevent fraud, which could materially harm our business. In addition, we may be subject to sanctions or investigation by government
authorities or self-regulatory organizations, such as the SEC or the Financial Industry Regulatory Authority (“ FINRA”). Any
such actions could affect investor perceptions of our company and result in an adverse reaction in the financial markets due to a loss
of confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline or limit
our access to capital.

We have begun to implement the actions noted below
(including appropriate staffing to execute such actions) in the following areas to strengthen our internal control over financial reporting
in an effort to remediate the material weaknesses.

Inventory. We have enhanced the design
of existing controls and implemented new controls over the accounting, processing and recording of inventory. Specifically, we have strengthened
the design of the management review control over inventory-in-transit. We have implemented processes to ensure timely identification and
evaluation of inventory cut-off, and we are requiring additional accountability from counterparties on the accuracy of incoming and outgoing
shipment documentation. We have deployed information system enhancements and have made better use of current system capabilities in order
to improve the accuracy of inventory cut-off, reporting and reconciliation. In addition, we have been creating an assembly bill of materials
(“ BOM”) in our business software to facilitate efficient and accurate manufacturing and provide proper recording of raw materials
inventory. The BOM structure ultimately minimizes inventory inaccuracies and production delays, and we have been increasing cycle counting
of inventory used in production to improve accuracy. Lastly, we have recently hired a material specialist whose responsibility is to maintain
inventory records.

Revenue Recognition. We intend on enhancing
the design of existing controls and implement new controls over the review of the application and recording of revenue for customer contracts
under the guidance outlined in ASC 606. We also intend on implementing more thorough reviews of contracts by evaluating contractual terms
and determining whether certain contracts should be consolidated, involve related parties and the proper timing of revenue recognition.
These reviews will include more comprehensive contractual analysis from our legal team while ensuring qualified resources are involved
and adequate oversight is performed during the internal technical accounting review process.

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Accounts Receivable. We intend on enhancing
the design of existing controls and implement new controls over the processing and review of accounts receivable billings. We plan to
supplement our accounting