8-K: Massimo Group Appoints HHL LLP as New Independent Auditor Amidst Ongoing Internal Control Weaknesses

Massimo Group announced the dismissal of ZH CPA, LLC and the appointment of HHL LLP as its new independent registered public accounting firm, effective June 30, 2025, while acknowledging previously reported material weaknesses in internal controls.

Summary

• Massimo Group's audit committee approved the dismissal of ZH CPA, LLC and the appointment of HHL LLP as its independent registered public accounting firm for the fiscal year ending December 31, 2025.
• The change in auditors is effective June 30, 2025.
• ZH CPA, LLC had served as the company's auditor since August 26, 2022.
• No disagreements on accounting principles or practices, financial statement disclosure, or auditing scope or procedures were reported with ZH CPA, LLC.
• The company previously reported material weaknesses in its internal control over financial reporting in its Quarterly Report on Form 10-Q for the period ended March 31, 2025, and its Annual Report on Form 10-K for the year ended December 31, 2024.
• These weaknesses relate to ineffective controls over information and communication, and period-end financial disclosure and reporting processes, including internal communication between sales and accounting departments, external client communication, and effectiveness of controls over accurate accounting and financial reporting.
• Massimo Group did not consult with HHL LLP regarding accounting principles or audit opinions prior to their appointment.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While the auditor change itself was conducted without disagreements, the persistent material weaknesses in internal controls over financial reporting are a significant concern that could impact the reliability of future financial statements. The change of auditor does not resolve these underlying issues.

Positives

• No disagreements were reported with the outgoing auditor, ZH CPA, LLC, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.
• The audit committee, after discussion with management, approved the change, indicating a structured corporate governance process.

Negatives

• The company has reported material weaknesses in its internal control over financial reporting for periods ending March 31, 2025, and December 31, 2024.
• These weaknesses include ineffective controls over information and communication, and period-end financial disclosure and reporting processes.
• Specific issues cited are a lack of effective internal communication between the sales and accounting departments, issues with external client communication, and a lack of effectiveness of controls over accurate accounting and financial reporting and reviewing underlying financial statement elements.

Risks

• Material weaknesses in internal control over financial reporting could lead to errors or misstatements in financial statements.
• Ineffective controls over information and communication may hinder accurate and timely financial reporting.
• Lack of effective controls over accurate accounting and financial reporting increases the risk of financial irregularities.

Future Outlook

The newly appointed auditor, HHL LLP, will serve as the independent registered public accounting firm for the fiscal year ending December 31, 2025.

Management Comments

• By: /s/ David Shan Name: David Shan Title: Chief Executive Officer (Signature confirming the filing)

Industry Context

Changes in independent auditors are a common occurrence in the corporate landscape, often driven by factors such as fee negotiations, service scope, or a desire for fresh perspectives. However, such changes, especially when accompanied by disclosures of material weaknesses in internal controls, draw scrutiny from investors and regulators. Strong internal controls are fundamental to reliable financial reporting and are a key focus for companies and their auditors, particularly in the wake of regulations like Sarbanes-Oxley.

Corporate Governance

Stakeholder Impact

• Shareholders: May face increased scrutiny regarding the reliability of financial statements due to reported material weaknesses in internal controls, potentially impacting investor confidence. The change in auditor, while routine, adds another layer of oversight.
• Management: Must prioritize remediation of the identified material weaknesses in internal controls to ensure accurate financial reporting and compliance.
• Employees: Specifically, sales and accounting departments, are impacted by the identified communication and control deficiencies, requiring improved coordination and adherence to new or revised processes.

Next Steps

• HHL LLP will serve as the independent registered public accounting firm for the fiscal year ending December 31, 2025.
• The company is expected to continue addressing the reported material weaknesses in internal control over financial reporting.

Key Dates

Keywords

Massimo Group, MAMO, auditor change, independent registered public accounting firm, ZH CPA, HHL LLP, internal control over financial reporting, material weaknesses, SEC filing, Form 8-K, corporate governance, financial reporting