8-K: EBET Inc. Dismisses BF Borgers, Appoints Astra Audit & Advisory as New Auditor

EBET Inc. has changed its independent registered public accounting firm, dismissing BF Borgers CPA, PC and appointing Astra Audit & Advisory, LLC.

Summary

• EBET Inc. dismissed BF Borgers CPA, PC as its independent registered public accounting firm on May 9, 2024.
• The dismissal was approved by the Audit Committee of the Board of Directors.
• BF Borgers' report on the company's financial statements for 2022 and 2023 did not contain an adverse opinion or disclaimer, but included an explanatory paragraph about the company's ability to continue as a going concern.
• There were no disagreements with BF Borgers on accounting principles, financial statement disclosure, or auditing scope.
• The SEC has advised that BF Borgers is not currently permitted to appear or practice before the SEC due to an order issued on May 3, 2024.
• On May 12, 2024, the Audit Committee approved the appointment of Astra Audit & Advisory, LLC as the new independent registered public accounting firm for the fiscal years ending September 30, 2024 and 2023.
• EBET did not consult with Astra on accounting principles or audit opinions prior to the appointment.

Sentiment

Score: 3

Explanation: The dismissal of the auditor due to regulatory issues and the going concern paragraph in the audit report are significant negative signals, indicating potential financial instability and raising concerns about the reliability of past financial statements.

Positives

• The transition to a new auditor was completed quickly, with Astra Audit & Advisory, LLC appointed just three days after the dismissal of BF Borgers.
• There were no disagreements with the previous auditor, BF Borgers, regarding accounting principles or auditing scope.

Negatives

• The previous auditor, BF Borgers, was dismissed and is not permitted to practice before the SEC.
• BF Borgers' audit report included an explanatory paragraph about the company's ability to continue as a going concern, which is a negative signal.

Risks

• The dismissal of BF Borgers and their inability to practice before the SEC could raise concerns about the reliability of past financial statements.
• The going concern paragraph in BF Borgers' audit report indicates potential financial instability for EBET.

Future Outlook

The company will be audited by Astra Audit & Advisory, LLC for the fiscal year ending September 30, 2024.

Management Comments

• The Audit Committee approved the dismissal of BF Borgers and the appointment of Astra Audit & Advisory, LLC.

Industry Context

Changes in auditors are not uncommon, but the circumstances surrounding BF Borgers' dismissal, including the SEC order, are unusual and could raise concerns among investors.

Comparison to Industry Standards

• The dismissal of an auditor due to regulatory issues is not a typical event and may raise concerns about the company's financial reporting practices.
• Most companies change auditors due to disagreements or for strategic reasons, not because the auditor is barred from practicing before the SEC.
• The going concern paragraph in the previous auditor's report is a significant concern, as it indicates potential financial instability, which is not typical for companies in good standing.

Legal Proceedings

• The SEC has issued an order barring BF Borgers from practicing before the commission.

Stakeholder Impact

• Shareholders may be concerned about the reliability of past financial statements and the company's financial stability.
• Creditors may be more cautious about extending credit to the company due to the going concern issue.

Next Steps

• Astra Audit & Advisory, LLC will conduct the audit for the fiscal year ending September 30, 2024.

Key Dates

Keywords

auditor, accounting, BF Borgers, Astra Audit & Advisory, SEC, financial statements, audit committee, going concern