10-K/A: Signing Day Sports Amends 10-K, Cites Control Weaknesses

Signing Day Sports, Inc. filed an amendment to its annual report, disclosing material weaknesses in its internal controls and outlining remediation efforts.

Summary

• An Amendment No. 1 (Form 10-K/A) was filed to the Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
• The amendment was filed solely to correct disclosures in Item 9A, 'Controls and Procedures'.
• Management concluded that disclosure controls and procedures were not effective as of December 31, 2024, due to identified material weaknesses.
• Internal control over financial reporting was also deemed not effective as of December 31, 2024.
• Material weaknesses include a lack of segregation of duties due to the company's size and the absence of a comprehensive and formalized accounting and financial reporting policies and procedures manual.
• Remediation actions commenced in the three months ended March 31, 2025, involving engaging qualified external consultants and initiating the development of a comprehensive policies manual.
• The aggregate market value of common stock held by non-affiliates was approximately $3,301,121.43 as of June 28, 2024.
• There were 3,947,781 shares of common stock outstanding as of August 5, 2025.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the disclosure of material weaknesses in internal controls, which indicates significant deficiencies in financial reporting reliability. While remediation efforts are underway, the current state of controls is a serious concern. The company's small market capitalization also suggests vulnerability to these issues.

Positives

• Management has commenced remediation actions to address the identified material weaknesses in internal controls.
• Qualified external consultants have been engaged to assist with financial reporting processes, account reconciliations, and review controls, providing an independent layer of oversight.
• Enhanced management review procedures have been implemented immediately.
• The company has initiated the development of a comprehensive accounting and financial reporting policies and procedures manual.

Negatives

• Disclosure controls and procedures were not effective as of December 31, 2024.
• Internal control over financial reporting was not effective as of December 31, 2024.
• A material weakness exists due to a lack of sufficient resources for adequate supervision and segregation of duties, attributed to the company's size.
• A material weakness exists due to the absence of a comprehensive and formalized accounting and financial reporting policies and procedures manual.

Risks

• If material weaknesses are not remediated, they could result in material misstatements to annual or interim consolidated financial statements.
• Unremediated weaknesses could lead to delayed filing of required periodic reports.
• Investors may lose confidence in the accuracy and completeness of financial reports, potentially adversely affecting the common stock market price.
• The company could become subject to litigation or investigations by NYSE American LLC, the SEC, or other regulatory authorities.
• Addressing these material weaknesses could require additional financial and management resources.
• Internal control systems have inherent limitations and can only provide reasonable, not absolute, assurances.
• Projections of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in conditions, or that compliance may deteriorate.

Future Outlook

Management plans to expand the finance team and reassign responsibilities as the company grows to achieve more effective separation of duties. The material weaknesses will not be considered fully remediated until the new controls and procedures have operated effectively for a sufficient period of time and management has concluded, through testing, that these controls are effective. The company intends to continue monitoring and upgrading its internal controls as necessary or appropriate for its business.

Management Comments

• Our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Annual Report on Form 10-K/A, our disclosure controls and procedures were, in design and operation, not effective at a reasonable assurance level due to the material weaknesses in internal control over financial reporting.
• Our Chief Executive Officer and our Chief Financial Officer concluded that the Company’s internal control over financial reporting as of December 31, 2024 was not effective due to the following material weaknesses in internal control over financial reporting: Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties; and We did not have a comprehensive and formalized accounting and financial reporting policies and procedures manual which details the information needed for our financial reporting process.
• To address the material weakness related to inadequate segregation of duties, management has engaged qualified external consultants to assist with financial reporting processes, account reconciliations, and review controls.
• Management has initiated the development of a comprehensive accounting and financial reporting policies and procedures manual.

Industry Context

This filing highlights a common challenge for smaller reporting companies, which often face resource constraints that impact their ability to implement robust internal controls and achieve adequate segregation of duties. The reliance on external consultants for remediation is a typical approach in such situations, aiming to bridge the gap until internal resources can be scaled. Effective internal controls are crucial across all industries for maintaining investor confidence and ensuring financial reporting integrity.

Comparison to Industry Standards

• The identified material weaknesses, particularly the lack of segregation of duties and formalized policies, are fundamental control deficiencies that deviate significantly from best practices for publicly traded companies, regardless of size. Larger, more established companies like Microsoft or Apple, or even mid-cap firms, typically have extensive, well-documented internal control frameworks (e.g., based on COSO) and dedicated finance teams with clear segregation of duties to prevent errors and fraud.
• While smaller reporting companies are exempt from the auditor attestation requirement under Sarbanes-Oxley Section 404(b), the expectation for effective internal controls remains. The remediation steps, such as engaging external consultants and developing a policies manual, align with standard industry practices for addressing such deficiencies, similar to how a company like ZoomInfo or HubSpot might address control gaps during their growth phases, albeit on a smaller scale.
• The market value of $3.3 million for non-affiliate shares suggests a micro-cap company, where resource limitations are more pronounced. However, the core principles of financial integrity and reliable reporting are universal, and these weaknesses indicate a need for significant improvement to meet the baseline expectations of investors and regulators for any NYSE American LLC listed entity.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential loss of confidence in financial reporting accuracy, adverse impact on stock price, and increased risk of misstatements.
• Investors: Increased scrutiny due to control deficiencies, potentially impacting investment decisions.
• Management: Increased workload and focus on remediation, potential for regulatory scrutiny.
• Regulatory Authorities (SEC, NYSE American LLC): Potential for investigations if weaknesses are not adequately addressed.

Next Steps

• Management will monitor the effectiveness of remediation plans and make appropriate changes.
• Management plans to expand the finance team and reassign responsibilities as the company grows to achieve more effective separation of duties.
• The material weaknesses will not be considered fully remediated until additional controls and procedures have operated effectively for a sufficient period and management has concluded, through testing, that these controls are effective.
• The company intends to continue to monitor and upgrade its internal controls.

Key Dates

Recommendation

The disclosure of material weaknesses in internal controls is a significant negative, indicating fundamental issues with financial reporting reliability. While management has initiated remediation efforts, the effectiveness and timeline for full remediation are uncertain. The company's small market capitalization further amplifies the risk associated with these control deficiencies. A 'hold' recommendation is appropriate given the ongoing remediation efforts and the potential for future improvements, but significant risks remain until these weaknesses are fully addressed and verified.

Keywords

SEC Filing, 10-K/A, Internal Controls, Material Weaknesses, Disclosure Controls, Financial Reporting, Corporate Governance, Remediation, Segregation of Duties, Accounting Policies, Signing Day Sports