Business Context and Reporting Period
This Form 8-K is filed by Hillstream BioPharma, Inc. (trading symbol: HILS) on June 14, 2023. The filing reports a change in the registrant's certifying accountant. The company is an emerging growth company incorporated in Delaware.
Key Financial Metrics
This filing does not contain specific financial performance data such as revenue, profit, cash flow, or debt levels. However, it references the following financial conditions:
- Going Concern: The prior auditor's report for the year ended December 31, 2022, included an explanatory paragraph regarding the company's ability to continue as a going concern.
- Restatements: The company concluded that its audited financial statements for the year ended December 31, 2022, and unaudited statements for the quarters ended March 31, June 30, and September 30, 2022, must be restated and can no longer be relied upon.
Material Changes
The primary material change reported is the resignation of Mayer Hoffman McCann P.C. (MHM) as the independent registered public accounting firm. The resignation is effective as of the earlier of: (i) the appointment of a new firm, (ii) the filing of the Q2 2023 Form 10-Q, or (iii) August 19, 2023.
The filing details significant internal control issues identified during the 2021 and 2022 fiscal years, including:
- Issues with vendor invoices.
- Lack of controls to review the completeness and accuracy of contracts with financial reporting implications.
- Lack of segregation of duties.
- Insufficient accounting and reporting knowledge to perform review controls on technical accounting matters.
The company confirmed there were no disagreements with MHM regarding accounting principles, practices, or auditing scope.
Guidance, Outlook, and Risks
Outlook: The company is committed to conducting a competitive selection process to appoint a new independent registered public accounting firm for the fiscal year ending December 31, 2023.
Risks and Contingencies: The filing highlights material weaknesses in internal controls over financial reporting and the necessity of restating prior financial periods. The presence of a going concern qualification in the previous audit report indicates significant liquidity or operational risks.
Investor Verification Checklist
- Verify the appointment of a new independent registered public accounting firm.
- Review the upcoming Form 10-Q for the quarter ended June 30, 2023, for the restated financial figures.
- Assess the company's current liquidity status given the prior "going concern" warning.
- Examine the specific details of the restatements for the 2022 fiscal year and 2022 interim quarters.
- Review the progress of remediation efforts for the identified material weaknesses in internal controls.