Business Context and Reporting Period
This Form 8-K is a current report filed by Surge Holdings, Inc. (referred to in metadata as Surgepays, Inc.) on April 30, 2018. The filing discloses a change in the company's certifying accountant effective as of the report date.
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 former auditor, Paritz & Co., P.A., issued audit reports for the fiscal years ended December 31, 2016, and 2017 that included an explanatory paragraph regarding the company's ability to continue as a going concern.
Material Changes
- Auditor Dismissal: The Board of Directors dismissed Paritz & Co., P.A., which had served as the independent registered accounting firm since 2010.
- New Engagement: Rodefer Moss & Co. PLLC was engaged as the new independent principal accountant and auditor for the fiscal year ending December 31, 2018.
- Reason for Change: The change is classified as a dismissal, not a resignation or declining to stand for re-election.
Guidance, Risks, and Contingencies
The filing states there were no disagreements with the former auditor regarding accounting principles, financial statement disclosure, or auditing scope during the two most recent fiscal years or the subsequent interim period. Additionally, no "reportable events" occurred as defined in Item 304(a)(1)(v) of Regulation S-K. The company did not consult with the new auditor regarding any matters described in Item 304(a)(2)(i) or (ii) prior to the engagement. The primary risk highlighted is the historical "going concern" qualification noted in prior audit reports.
Investor Verification Checklist
- Verify the status of the "going concern" qualification mentioned in the 2016 and 2017 audit reports.
- Confirm the effective date of the new auditor's engagement and the scope of their initial review.
- Review the attached letter from Paritz & Co. (Exhibit 16.1) to ensure concurrence with the company's statements regarding the dismissal.
- Monitor upcoming financial statements for the fiscal year ending December 31, 2018, to assess if the going concern issue has been resolved.