Company: TOGIW
Filing Date: 2025-04-23
Form Type: 10-K
Source: 0001214659-25-006296
Chunk: 62

Company: TurnOnGreen, Inc.
Filing Date: 2025-04-23
Form: 10-K
Item: Item 9
Chunk 62
---
 associated with related party transactions and                                     

Management evaluated the impact of our failure
to have segregation of duties and proper reviews, inadequacy in design of revenue recognition policies and procedures, failure to properly
account for and provide adequate disclosures of complex financial instruments, fair value estimate procedures and reviews, and deficiency
in identification and a disclosure of related party transactions and concluded that the multiple control deficiencies that resulted represented
material weaknesses.

While management evaluates the effectiveness of
our internal controls on a regular basis, these controls may not always be effective. There are inherent limitations on the effectiveness
of internal controls, including collusion, management override, and failure in human judgment. In addition, control procedures are designed
to reduce rather than eliminate business risks. In the event our Chief Executive Officer or Chief Financial Officer, our certifying officers
under the Sarbanes-Oxley Act of 2002 (the “ SOX”), or our independent registered public accounting firm determines our internal
controls over financial reporting are not effective 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.

Remediation

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