{"url_path":"/sec/avai/10-k/2026/item-9a","section_key":"item-9a","section_title":"Item 9A Controls and Procedures.**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-07-14","source_url":"https://www.sec.gov/Archives/edgar/data/1740797/0001740797-26-000017-index.html","accession_number":"0001740797-26-000017","cik":"0001740797","ticker":"AVAI","issuer_name":"AVAI BIO, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1740797/0001740797-26-000017-index.html","primary_entity_key":"0001740797","primary_entity_name":"AVAI BIO, INC."},"word_count":693,"has_tables":true,"body_markdown":"**Item 9A. Controls and Procedures.**\n\n** **\n\n**Evaluation of Disclosure Controls and Procedures**\n\n \n\nOur Principal Executive Officer and Principal Financial\nOfficer conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)\nunder the Securities Exchange Act of 1934 (the “Exchange Act”). Based on this evaluation, our Principal Executive Officer\nand Principal Financial Officer concluded that in light of the material weaknesses described below, our disclosure controls and procedures\nwere not effective as of March 31, 2026. See material weaknesses discussed below in Management’s Annual Report on Internal Control\nover Financial Reporting.\n\n** **\n\n**Management’s Report on Internal Control\nover Financial Reporting**\n\n \n\nManagement is responsible for establishing and maintaining\nadequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over\nfinancial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation\nof financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections\nof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in\nconditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation\nof management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness\nof the Company’s internal control over financial reporting as of March 31, 2026, using the criteria established in “Internal\nControl - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (\"COSO\").\n\n \n\nA material weakness is a deficiency, or combination\nof deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement\nof the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of\nthe effectiveness of internal control over financial reporting as of March 31, 2026, the Company determined that there were control deficiencies\nthat constituted material weaknesses, as described below.\n\n \n\n1.              \nWe do not have an Audit Committee - While not being legally obligated to have an audit committee,\nit is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control\nover the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee and does not\ninclude a member that is considered to be independent of management to provide the necessary oversight over management’s activities.\n\n \n\n2.              \nWe did not maintain appropriate cash controls - As of March 31, 2026, the Company has not maintained\nsufficient internal controls over financial reporting for cash, including failure to segregate cash handling and accounting functions,\nand did not require dual signatures on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated\nby the fact that the Company had limited transactions in its bank accounts.\n\n \n\n3.              \nWe did not implement appropriate information technology controls - As at March 31, 2026, the Company\nretains copies of all financial data and material agreements; however, there is no formal procedure or evidence of normal backup of the\nCompany’s data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.\n\n \n\nAccordingly, the Company concluded that these control\ndeficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not\nbe prevented or detected on a timely basis by the company’s internal controls.\n\n \n\nAs a result of the material weaknesses described above,\nmanagement has concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2026, based\non criteria established in Internal Control- Integrated Framework issued by COSO.\n\n \n\n47\n\n \n\n \n\n**Changes in Internal Controls over Financial\nReporting**\n\n \n\nThere was no change in the Company’s internal\ncontrol over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially\naffect, the Company’s internal control over financial reporting."}