Business Context and Reporting Period
This Form 8-K is a current report filed by CHF Solutions, Inc. (not Nuwellis, Inc.) on June 5, 2017. The registrant is a Delaware corporation headquartered in Eden Prairie, Minnesota, and is classified as an emerging growth company. The filing primarily addresses a change in the company's independent registered public accounting firm.
Key Financial Metrics
The filing does not provide specific numerical data regarding revenue, profit, cash flow, margins, debt, or liquidity for the current period. However, it notes that the prior independent auditor, Ernst & Young LLP, issued audit reports for the years ended December 31, 2016, and 2015 that included an explanatory paragraph expressing substantial doubt regarding the Company's ability to continue as a going concern.
Material Changes
- Dismissal of Auditor: On June 5, 2017, the Audit Committee dismissed Ernst & Young LLP as the independent registered public accounting firm effective immediately.
- Engagement of New Auditor: On June 6, 2017, the Audit Committee engaged Baker Tilly Virchow Krause, LLP as the new independent registered public accounting firm for the year ending December 31, 2017.
- Audit History: There were no disagreements with Ernst & Young regarding accounting principles, practices, or auditing scope during the years ended December 31, 2016 and 2015, or through June 5, 2017.
Outlook, Risks, and Management Commentary
The filing highlights a significant risk factor: the prior auditor's expression of substantial doubt regarding the Company's ability to continue as a going concern in its 2015 and 2016 audit reports. The company confirmed that no reportable events occurred that would have required reference in the auditor's reports. The transition to Baker Tilly is subject to standard client acceptance procedures. No forward-looking guidance or financial outlook is provided in this specific filing.
Investor Verification Checklist
- Verify the reasons for the dismissal of Ernst & Young LLP beyond the standard competitive process.
- Review the "going concern" qualification in the 2015 and 2016 financial statements to understand the severity of liquidity risks.
- Confirm the status of the engagement with Baker Tilly Virchow Krause, LLP and whether they have accepted the client.
- Examine the letter from Ernst & Young (Exhibit 16.1) for any additional disclosures regarding the dismissal.
- Check subsequent filings for updated financial data to assess if the going concern risk has been resolved.