RCM TECHNOLOGIES, INC.
For the period ended Jan 3, 2026. Filed Apr 3, 2026.
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FY2026 · Filed Apr 3, 2026
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Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives of ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to enable timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms promulgated by the SEC. Our management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and there is no assurance that our disclosure controls and procedures will operate effectively under all circumstances. Based on our evaluation, our principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures (as such term is defined in Rule(s) 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of January 3, 2026, because of the material weaknesses in our internal control over financial reporting described below. Our independent registered public accounting firm, EisnerAmper LLP, has audited the Company’s internal control over financial reporting as of January 3, 2026 and has issued an attestation report on the ineffectiveness of the Company’s internal control over financial reporting. EisnerAmper LLP’s report is also included in this Annual Report on Form 10-K.
Material Weaknesses in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Management identified control deficiencies that resulted in material weaknesses in our internal control over financial reporting as of January 3, 2026. Specifically, the Company,
| ● | Did not design and maintain effective internal controls at the entity level and over business process cycles; |
| ● | Did not design or maintain sufficient documentation during its management review controls across business process cycles; |
| ● | Did not design and maintain effective controls related to the Company’s risk assessment and monitoring activities, including controls to periodically evaluate financial reporting risks and monitor the effectiveness of internal controls over financial reporting; |
| ● | Did not retain sufficient documentation to evidence the design and implementation of controls over the change management and logical access cycles for its timekeeping systems. |
These deficiencies demonstrate gaps in management's ability to identify, analyze, and respond to financial reporting risks, reflecting deficiencies in the design and maintenance of effective internal controls over business processes, as well as in the monitoring component of internal control.
These material weaknesses did not result in a misstatement of our annual or interim consolidated financial statements. However, these material weaknesses could lead to a misstatement of substantially all account balances or disclosures, resulting in a material misstatement in our annual or interim consolidated financial statements that would not be prevented or detected. Notwithstanding the above-identified material weaknesses, management believes the consolidated financial statements, as included in Part II, Item 8 of this Annual Report on Form 10-K, present the Company's financial condition and results of operations fairly, in all material respects.
| ITEM 9A. | CONTROLS AND PROCEDURES (CONTINUED) |
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Planned Material Weakness Remediation Activities
To address these material weaknesses, management, with oversight from the Audit Committee. have commenced actions to enhance the Company's control framework and policies, maintain evidence of control procedure operation, and improve our control environment.
Our planned remediation efforts related to the above-identified material weaknesses include, but are not limited to:
| ● | Reevaluate the overall control environment using a risk-based approach by performing a comprehensive assessment of financial reporting risks, reassessing the design and adequacy of existing controls and monitoring activities, and implementing enhancements to ensure controls are appropriately aligned with identified risks and operate effectively across the organization. |
| ● | Strengthen management review controls by integrating standardized documentation requirements into the review process to ensure analyses, thresholds, conclusions, and follow-up actions are clearly supported. |
| ● | Improve quarter-close controls by reevaluating the design, timing, and documentation requirements and implementing a structured close calendar with clear deadlines, ownership, and escalation protocols. |
| ● | Implement targeted training for personnel involved in financial reporting and internal control activities to strengthen understanding of the Company's internal control over financial reporting framework, including Sarbanes-Oxley requirements and expectations for the design, execution, documentation, precision of review, and timeliness required to support the effective operation of management review controls and other key financial reporting controls. |
| ● | Update its production application suite to phase out legacy timekeeping systems, implement a software development tool and update procedures to enhance change management documentation, and centralize provisioning and deprovisioning for remaining timekeeping systems via an IT ticketing system. |
We will continue to assess the effectiveness of our internal control over financial reporting and take steps to remediate the known material weaknesses expeditiously. These actions are subject to ongoing senior management review as well as Audit Committee oversight. The implementation of these remediation efforts is in progress, may require additional expenditures to implement, and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. As a result, the timing of when we will be able to remediate the material weaknesses fully is uncertain. We may also conclude that additional measures may be required to remediate the material weakness in our internal control over financial reporting, which may necessitate further implementation and evaluation time.
Changes in Internal Control Over Financial Reporting
Other than the identification of the material weaknesses and remediation efforts described above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended January 3, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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