{"url_path":"/sec/chai/10-k/2026/item-15","section_key":"item-15","section_title":"Item 15 CONTROLS AND PROCEDURES**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1649009/0001493152-26-023908-index.html","accession_number":"0001493152-26-023908","cik":"0001649009","ticker":"CHAI","issuer_name":"Core AI Holdings, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1649009/0001493152-26-023908-index.html","primary_entity_key":"0001649009","primary_entity_name":"Core AI Holdings, Inc."},"word_count":1126,"has_tables":true,"body_markdown":"**ITEM\n15. CONTROLS AND PROCEDURES**\n\n \n\n \n**(a)**\n**Disclosure\nControls and Procedures**\n\n \n\nDisclosure\ncontrols are procedures that are designed with the objective of ensuring that information required to be disclosed by us in the reports\nthat we file or submit under the Exchange Act, is recorded, processed, summarized, and reported within the time period specified in the\nSEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated\nand communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely\ndecisions regarding required disclosure. Pursuant to Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, with the participation\nof our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls\nand procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon\nthat evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective\nas of December 31, 2025.\n\n \n\n67\n\n \n\n \n\nOur\nmanagement is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over\nfinancial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under\nthe supervision of, our principal executive and principal financial and accounting officers and effected by our board of directors, management\nand other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial\nstatements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance\nof records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable\nassurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that\nour receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide\nreasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could\nhave a material effect on our financial statements.\n\n \n\n \n**(b)**\n**Management’s\nAnnual Report on Internal Control over Financial Reporting**\n\n \n\nOur\nmanagement is responsible for establishing and maintaining adequate internal control over financial reporting of the Company (as defined\nby Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide\nreasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes\nin accordance with US GAAP. Core AI’s internal control over financial reporting includes those policies and procedures that (i)\npertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of\nthe assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial\nstatements in accordance with US GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations\nof management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,\nuse, or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent\nlimitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation\nof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that\nthe degree of compliance with the policies or procedures may deteriorate.\n\n \n\nManagement,\nwith the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the\nCompany’s ICFR as of December 31, 2025 using the criteria set forth in Internal Control – Integrated Framework issued by\nthe Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework). Based on this assessment, management identified\na material weakness in the Company’s ICFR related to revenue recognition cut-off, as described below. Because of this material\nweakness, management concluded that the Company’s ICFR was not effective as of December 31, 2025.\n\n \n\nDuring\nthe audit of the consolidated financial statements for the year ended December 31, 2025, the Company identified that revenue from certain\nadvertising and publishing arrangements had been recorded in the wrong reporting period. Specifically, the Company did not have effective\ncontrols to ensure that revenue was recognized in the appropriate period based on the satisfaction of performance obligations and the\nunderlying reporting from advertising platforms and counterparties. As a result, the Company recorded post-closing adjustments to reclassify\nrevenue between reporting periods and to correct related accounts receivable and contract liability balances.\n\n \n\nThis\ndeficiency in the design and operation of controls over revenue cut-off created a reasonable possibility that material misstatements\nof revenue and related accounts would not be prevented or detected on a timely basis. Accordingly, management concluded that this deficiency\nrepresents a material weakness in the Company’s ICFR as of December 31, 2025.\n\nThe\nCompany has begun implementing a remediation plan to address the material weakness described above. These remediation actions include,\nbut are not limited to:\n\n \n\n●Enhancing\npolicies and procedures over revenue recognition cut-off, including formalizing documentation\nof the timing of performance obligations for each significant revenue stream.\n\n●Implementing\nadditional reconciliations and analytical reviews comparing platform reports, cash collections,\nand recognized revenue at period end.\n\n●Strengthening\nthe period-end close checklist and review controls specific to revenue cut-off, including\nindependent review by finance personnel who are not responsible for initial revenue recognition\nentries.\n\n●Providing\nadditional training to accounting and finance personnel on the Company’s revenue recognition\naccounting policies and cut-off procedures.\n\n \n\nThe\nmaterial weakness will not be considered remediated until the applicable controls have been designed, implemented, and operate effectively\nfor a sufficient period of time, and management has tested and concluded that the controls are operating effectively.\n\n \n\nExcept\nfor the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting that\noccurred during the year ended December 31, 20X5 that have materially affected, or are reasonably likely to materially affect, the Company’s\ninternal control over financial reporting.\n\n \n\n \n**(c)**\n**Attestation\nReport of the Registered Public Accounting Firm**\n\n \n\nThis\nAnnual Report does not include an attestation report of our independent registered public accounting firm regarding internal control\nover financial reporting due to an exemption for non-accelerated filers.\n\n \n\n \n**(d)**\n**Changes\nin Internal Control over Financial Reporting**\n\n \n\nThere is no change in the issuer’s internal\ncontrol over financial reporting identified in connection with the evaluation described above, which occurred during the period covered\nby this Annual Report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control\nover financial reporting. ****"}