Business Context and Reporting Period
This Form 8-K Current Report was filed by Nephros, Inc. on July 16, 2007. The filing primarily addresses a change in the company's independent registered public accounting firm.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. However, it notes that the audit reports for the fiscal years ended December 31, 2006, and December 31, 2005, included an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern.
Material Changes
- Dismissal of Previous Accountant: On July 16, 2007, the Audit Committee dismissed Deloitte & Touche LLP as the independent registered public accounting firm, effective immediately.
- Engagement of New Accountant: On July 16, 2007, the Audit Committee engaged Rothstein Kass & Company, P.C. as the new independent registered public accounting firm, effective immediately.
- Internal Control Weaknesses: Prior to the filing of the 2006 and 2005 Form 10-KSB, Deloitte & Touche and management advised the Audit Committee of a material weakness in internal control over financial reporting as of December 31, 2006, and December 31, 2005.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, revenue outlook, or management commentary regarding future operations. The primary risk highlighted is the previously identified material weakness in internal controls and the substantial doubt regarding the company's ability to continue as a going concern noted in prior audit reports. The company confirmed there were no disagreements with Deloitte & Touche regarding accounting principles or auditing scope.
Important Facts for Investors to Verify
- Review the specific details of the material weakness in internal control over financial reporting referenced in the Company's Form 10-KSB filings for 2005 and 2006.
- Verify the status of the "going concern" qualification in the most recent financial statements.
- Confirm the transition plan and timeline for the new auditor, Rothstein Kass & Company, P.C., to complete their review.
- Examine the letter from Deloitte & Touche (Exhibit 16.1) to ensure they agree with the statements made in this filing regarding the dismissal.