8-K: HUMBL Inc. Changes Accounting Firms Following SEC Order Against Previous Auditor

HUMBL Inc. has dismissed BF Borgers CPA PC as its independent auditor and engaged Fruci & Associates II, PLLC, effective May 8, 2024, following an SEC order against BF Borgers.

Summary

• HUMBL Inc. dismissed BF Borgers CPA PC as their independent registered public accounting firm on May 8, 2024.
• The company engaged Fruci & Associates II, PLLC as their new auditor on May 9, 2024.
• The change was approved by the company's Board of Directors.
• BF Borgers had been the company's auditor since 2021.
• There were no disagreements between HUMBL and BF Borgers regarding accounting principles, financial statement disclosure, or auditing scope.
• There were no reportable events during BF Borgers' tenure as auditor.
• HUMBL did not consult with Fruci regarding accounting principles or audit opinions prior to their engagement.
• BF Borgers' audit reports for 2022 and 2023 did not contain any adverse opinions or disclaimers, but included an explanatory paragraph about the company's ability to continue as a going concern.
• The SEC has advised that BF Borgers is not currently permitted to practice before the SEC due to an SEC order dated May 3, 2024.

Sentiment

Score: 3

Explanation: The document highlights a significant negative event with the change of auditors due to regulatory issues and a going concern warning, which raises concerns about the company's financial health and governance.

Positives

• There were no disagreements between HUMBL and BF Borgers on accounting principles or auditing procedures.
• The company acted quickly to replace their auditor after the SEC order against BF Borgers.
• The audit reports from BF Borgers did not contain any adverse opinions or disclaimers.

Negatives

• BF Borgers' audit reports for 2022 and 2023 included an explanatory paragraph regarding substantial doubt about HUMBL's ability to continue as a going concern.
• The change in auditors was necessitated by an SEC order against the previous auditor, BF Borgers.

Risks

• The SEC order against BF Borgers could raise concerns about the reliability of past audits.
• The going concern warning in the previous audit reports indicates potential financial instability for HUMBL.
• The need to change auditors may cause disruption and additional costs for the company.

Management Comments

• The change in auditors was approved by the Company's Board of Directors.

Industry Context

The change in auditors is unusual and was driven by regulatory action against the previous auditor, which is not a common occurrence. This situation may raise concerns among investors and stakeholders about the company's financial oversight.

Comparison to Industry Standards

• The change of auditors is not typical, especially when it is driven by regulatory action against the auditor.
• Most companies change auditors due to disagreements or strategic reasons, not because the auditor is barred from practicing before the SEC.
• The going concern warning in the audit reports is a significant concern, as it indicates potential financial instability, which is not typical for established companies.

Legal Proceedings

• The SEC issued an order against BF Borgers, preventing them from practicing before the SEC.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the going concern warning.
• Creditors may be more cautious about lending to the company due to the going concern warning.
• Employees may be concerned about the company's financial stability.

Key Dates

Keywords

auditor, accounting firm, BF Borgers, Fruci & Associates, SEC, financial statements, audit, going concern