{"url_path":"/sec/mobx/10-q/2026/item-4","section_key":"item-4","section_title":"Item 4 Controls and Procedures.**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/1855467/0001493152-26-024661-index.html","accession_number":"0001493152-26-024661","cik":"0001855467","ticker":"MOBX","issuer_name":"MOBIX LABS, INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1855467/0001493152-26-024661-index.html","primary_entity_key":"0001855467","primary_entity_name":"MOBIX LABS, INC"},"word_count":1300,"has_tables":true,"body_markdown":"**Item\n4. Controls and Procedures.**\n\n \n\n**Limitations\non Effectiveness of Disclosure Controls and Procedures**\n\n \n\nIn\ndesigning and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange\nAct of 1934, as amended (the “Exchange Act”)), management recognizes that any controls and procedures, no matter how well\ndesigned and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of\ndisclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply\njudgment in evaluating the benefits of possible controls and procedures relative to their costs.\n\n \n\n**Evaluation\nof Disclosure Controls and Procedures**\n\n \n\nOur\nmanagement, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design\nand operation of our disclosure controls and procedures, pursuant to Rule 13a-15(b) of the Exchange Act, as of March 31, 2026. We identified\nmaterial weaknesses in our internal control over financial reporting as described below, and, as a result, our chief executive officer\nand chief financial officer concluded that our disclosure controls and procedures were not effective as of March 31, 2026.\n\n \n\n**Material\nWeaknesses in Internal Control over Financial Reporting**\n\n \n\nA\nmaterial weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a\nreasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on\na timely basis. The material weaknesses are as follows:\n\n \n\n \n●\nWe\ndid not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically,\nwe lacked a sufficient complement of personnel with an appropriate level of accounting knowledge, training and experience to appropriately\nanalyze, record and disclose accounting matters timely and accurately. Additionally, our insufficient complement of personnel resulted\nin an inability to consistently establish appropriate authorities and responsibilities in pursuit of financial reporting objectives,\nas demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.\n\n \n●\nWe\ndid not design and maintain an effective risk assessment process at a precise enough level to identify new and evolving risks of\nmaterial misstatement in our financial statements. Specifically, changes to existing controls or the implementation of new controls\nhave not been sufficient to respond to changes to our risks of material misstatement to financial reporting.\n\n \n\nThese\nmaterial weaknesses contributed to the following additional material weaknesses:\n\n \n\n \n●\nWe\ndid not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial\naccounting, reporting and disclosures, including controls over (i) the preparation and review of account reconciliations and journal\nentries, (ii) maintaining appropriate segregation of duties, (iii) determining the appropriate grant date for stock options and evaluating\nthe assumptions used within our Black-Scholes model to determine the fair value of option grants, and (iv) the review of the completeness\nand accuracy of the income tax provision and related disclosures. Additionally, we did not design and maintain controls over the\nclassification and presentation of accounts and disclosures in our financial statements and to ensure revenue transactions are recorded\nin the correct period.\n\n \n●\nWe\ndid not design and maintain effective controls to identify and account for certain non-routine, unusual or complex transactions,\nincluding the proper application of U.S. GAAP of such transactions. Specifically, we did not design and maintain effective controls\nto (i) timely identify, account for and value business combinations and asset acquisitions, including the associated tax implications\nand (ii) timely identify, account for and value our financing arrangements.\n\n \n●\nWe\ndid not design and maintain effective controls to verify transactions are properly authorized, executed, and accounted for, including\ntransactions related to incentive compensation arrangements.\n\n \n\n32\n\n \n\n \n\nThese\nmaterial weaknesses resulted in adjustments to revenue, accrued expenses, general and administrative expenses, inventory, costs of products\nsold, the accounting for and classification of redeemable convertible preferred stock, founders preferred and common stock, stock-based\ncompensation expense, other current assets, income tax expense and deferred tax liabilities, as well as the purchase price allocation\nfor our business combination, as of and for the years ended September 30, 2022 and 2021; adjustments to stock-based compensation expense,\naccrued expenses, other current liabilities and the PIPE make-whole liability, as well as the purchase price allocations for our business\ncombinations as of and for the interim periods ended December 31, 2023 and June 30, 2024, and as of and for the year ended September\n30, 2024; and, an adjustment to the number of shares of our Class B Common Stock reported as issued and outstanding as of June 30, 2025.\n\n \n\n \n●\nWe\ndid not design and maintain effective information technology (“IT”) general controls for information systems that are\nrelevant to the preparation of our financial statements. Specifically, we did not design and maintain (i) program change management\ncontrols to ensure that program and data changes are identified, tested, authorized and implemented appropriately, (ii) user access\ncontrols to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel,\n(iii) computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored, and\n(iv) program development controls to ensure that new software development is tested, authorized and implemented appropriately. These\ndeficiencies did not result in a misstatement to our financial statements.\n\n \n\nAdditionally,\nthese material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material\nmisstatement to our annual or interim financial statements that would not be prevented or detected.\n\n \n\n**Remediation\nPlan**\n\n \n\nWe\nhave begun an implementation plan to remediate these material weaknesses, which we expect will result in significant future costs for\nus.\n\n \n\nThose\nremediation measures will include (i) hiring additional accounting and IT personnel to enhance our financial reporting, accounting and\nIT capabilities; (ii) designing and implementing controls to formalize roles and review responsibilities and designing and implementing\ncontrols over segregation of duties; (iii) designing and implementing controls to identify and evaluate changes in our business and the\nimpact on our internal control over financial reporting; (iv) designing and implementing controls over the proper authorization of transactions;\n(v) designing and implementing controls to identify, account for, and value non-routine, unusual or complex transactions; (vi) designing\nand implementing formal accounting policies, procedures and controls supporting our financial close process, including controls over\naccount reconciliations and journal entries; (vii) designing and implementing controls over determining the appropriate grant date for\nstock options and evaluating the assumptions used within the Black-Scholes model; (viii) designing and implementing controls over the\ncompleteness and accuracy of the income tax provision and related disclosure; (ix) designing and implementing controls over the classification\nand presentation of accounts and disclosures in our financial statements and to ensure revenue transactions are recorded in the correct\nperiod; (x) implementing a more sophisticated IT system; and (xi) designing and implementing IT general controls.\n\n \n\nThe\nmaterial weaknesses will not be considered remediated until our remediation plan as described above has been fully implemented and we\ndetermine no further changes to the remediation plan are necessary, the applicable controls operate for a sufficient period of time,\nand we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively.\n\n \n\nNotwithstanding\nthe above, our management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly\nin all material respects our financial position, results of operations and cash flows for the periods\npresented.\n\n \n\n**Changes\nin Internal Control Over Financial Reporting**\n\n \n\nThere\nwere no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the\nExchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our\ninternal control over financial reporting.\n\n** **\n\n33\n\n \n\n** **\n\n**PART\nII. OTHER INFORMATION**"}