Company: LAAI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001683168-25-006093
Chunk: 18

Company: Loan Artificial Intelligence Corp.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 18
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a material weakness in the segregation of duties in the Company’s internal control of financial reporting as discussed below.

Management conducted an evaluation of the design
and operation of our internal control over financial reporting as of the end of the period covered by this report, based on the criteria
in a framework developed by the Company’s management pursuant to and in compliance with the criteria established. This evaluation
included review of the documentation of controls, evaluation of the design effectiveness of controls, walkthroughs of the operating effectiveness
of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that our internal control over financial
reporting was not effective, because management identified a material weakness in the Company’s internal control over financial
reporting related to the segregation of duties as described below.

While the Company does adhere to internal controls
and processes that were designed, it is difficult with a very limited staff to maintain appropriate segregation of duties in the initiating
and recording of transactions, thereby creating a segregation of duties weakness. Due to: (i) the significance of segregation of duties
to the preparation of reliable financial statements; (ii) the significance of potential misstatement that could have resulted due to the
deficient controls; and (iii) the absence of sufficient other mitigating controls, we determined that this control deficiency resulted
in more than a remote likelihood that a material misstatement or lack of disclosure within the annual or interim financial statements
may not be prevented or detected.

Management’s Remediation Initiatives

Management has evaluated, and continues to evaluate,
avenues for mitigating our internal controls weaknesses, but mitigating controls to completely mitigate internal control weaknesses have
been deemed to be impractical and prohibitively costly, due to the size of our organization at the current time. Management expects to
continue to use reasonable care in following and seeking improvements to effective internal control processes that have been and continue
to be in use at the Company.

b) Inherent Limitations on Internal controls

Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate. A control system, no matter how well designed and operated can provide only reasonable,
but not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact
that there are resource