PART II

Evaluation of Disclosure Controls and Procedures (As Revised)

In connection with the filing of our original Form 10-K on March 16, 2020, our management, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2019, concluded that our disclosure controls and procedures were effective.

Subsequent to that evaluation, management re-evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2019 and concluded that, because of a material weakness identified in our internal control over financial reporting in regard to foreign taxes, discussed below, our disclosure controls and procedures were not effective as of December 31, 2019.

Management Report on Internal Control over Financial Reporting (As Revised)

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

In connection with the preparation of the original Form 10-K, filed on March 16, 2020, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In conducting its assessment, our management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework in 2013. Based on this assessment, our management concluded that, as of December 31, 2019, our internal control over financial reporting was effective based on those criteria.

Subsequent to that evaluation, management re-evaluated the effectiveness of our internal control over financial reporting as of December 31, 2019 and concluded that, because of a material weakness identified in regard to foreign taxes, our internal control over financial reporting was not effective as of December 31, 2019.

This oversight was in connection with an ongoing tax issue between our German subsidiary and German tax authorities concerning an audit of the subsidiary’s tax returns for 2013 – 2015. The matter is described in the Company’s Form 10-Q for the quarter ended March 31, 2020, filed contemporaneously with this amendment.

The material weakness in internal control over financial reporting resulted because we did not formally document our evaluation of a potential contingency under ASC-740 regarding potential tax assessments in Germany on our subsidiary to support the evaluation of materiality and need for disclosure. The Company is in the process of improving its procedures, including translating significant documents itself rather than relying upon the Company’s German tax experts and advisors, and performing more formal analysis of its contingencies. The material weakness will not be considered remediated until the applicable remedial control operates for a sufficient period of time and management has concluded, through testing, that this control is operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of the year 2020.

We did not revise our consolidated financial statements for prior periods for the disclosure of the contingency for the potential German tax assessments based on our belief that the effect of the lack of the disclosure was not material to the financial statements taken as a whole. Therefore, we believe that, notwithstanding the material weakness discussed above, the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019 present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Changes in Internal Control over Financial Reporting

Except as noted above, there were no changes in internal controls over financial reporting (as defined in Rule 13a−15(f) promulgated under the Exchange Act) that occurred during our fourth fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Inherent Limitations on Disclosure Controls and Procedures

The effectiveness of our disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems and the possibility of human error. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures, no matter how well conceived, will prevent all errors or ensure that all material information will be made known in a timely manner to the appropriate levels of management.

Inherent Limitations on Internal Control

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of control. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, our internal control over financial reporting is designed to provide reasonable assurance of achieving its objectives.