8-K/A: PreAxia Dismisses Auditor Amid Financial Statement Reliability Concerns

PreAxia Health Care Payment Systems Inc. dismissed its auditor, Sadler Gibb & Associates, after the firm identified potential errors and stated previously issued financial statements may not be reliable.

Summary

• PreAxia Health Care Payment Systems Inc. dismissed Sadler Gibb & Associates as its independent registered public accounting firm on February 19, 2026.
• Sadler Gibb served from December 23, 2025, to February 19, 2026, and did not release any reports.
• During Sadler Gibb's engagement, PreAxia missed a filing deadline.
• Sadler Gibb identified multiple errors in the Company's financial statements for the quarter ended August 31, 2025 (filed October 21, 2025, amended October 24, 2025), and was examining potential errors for the year ended May 31, 2025 (filed September 12, 2025).
• Sadler Gibb communicated to management that, without sufficient audit evidence, the previously issued financial statements for May 31, 2025, and August 31, 2025, "may not be reliable."
• The Company ceased communications with Sadler Gibb and terminated the engagement before the review procedures were completed.
• Sadler Gibb believes the circumstances constitute a "reportable event" under Item 304(a)(1)(v) of Regulation S-K.
• PreAxia engaged M&K CPAs on February 20, 2026, to audit its consolidated financial statements as of May 31, 2026.
• PreAxia is in communications with the US Securities and Exchange Commission Office of Chief Accountant to resolve questions for the new accounting firm.
• No adverse opinions or disagreements were reported with previous auditors Fruci & Associates II, PLLC (for year ended May 31, 2025) or GreenGrowth CPAs (for year ended May 31, 2024).

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a highly negative development due to the former auditor's explicit concerns about financial statement reliability, the company's termination of the auditor mid-review, and the indication of a 'reportable event' to the SEC.

Positives

• A new independent registered public accounting firm, M&K CPAs, has been engaged to audit the consolidated financial statements as of May 31, 2026.
• No adverse opinions, disclaimers, or qualifications were issued by previous auditors Fruci & Associates II, PLLC for the year ended May 31, 2025.
• No disagreements were reported with Fruci & Associates II, PLLC during their tenure.
• No adverse opinions, disclaimers, or qualifications were issued by GreenGrowth CPAs for the year ended May 31, 2024.
• No disagreements were reported with GreenGrowth CPAs during their tenure.

Negatives

• Sadler Gibb & Associates, the former auditor, identified multiple errors in previously issued financial statements for the quarter ended August 31, 2025, and was examining potential errors for the year ended May 31, 2025.
• Sadler Gibb communicated to management that, absent sufficient appropriate audit evidence, the previously issued financial statements for the year ended May 31, 2025, and the quarter ended August 31, 2025, "may not be reliable."
• The Company ceased communications with Sadler Gibb and terminated the engagement before the auditor could complete its review procedures.
• Sadler Gibb believes the nature of discussions and termination constitutes a "reportable event" under Item 304(a)(1)(v) of Regulation S-K.
• PreAxia missed a filing deadline during Sadler Gibb's engagement.

Risks

• The reliability of previously issued financial statements for the year ended May 31, 2025, and the quarter ended August 31, 2025, is in question, as stated by the former auditor.
• The Company's cessation of communication with its auditor and subsequent termination of engagement before review completion raises concerns about corporate governance and transparency.
• Ongoing communications with the US Securities and Exchange Commission Office of Chief Accountant indicate potential regulatory scrutiny or issues that need resolution.
• The missed filing deadline suggests operational or compliance challenges.
• The need for a new auditor to address questions from the SEC Office of Chief Accountant could lead to delays or restatements.

Future Outlook

PreAxia Health Care Payment Systems Inc. is in communications with the US Securities and Exchange Commission Office of Chief Accountant to resolve certain questions that will be addressed by its newly engaged accounting firm, M&K CPAs, who will audit the consolidated financial statements as of May 31, 2026.

Management Comments

• "During the engagement, PreAxia missed a filing deadline and in discussions with SadlerGibb, regarding valuation and materiality in prior periods, we never reached any definitive conclusions."
• "PreAxia is in communications with the US Securities and Exchange Commission Office of Chief Accountant to resolve certain questions to be addressed by our new accounting firm."

Industry Context

StockSavvy.ai notes that frequent auditor changes, especially those involving disagreements over financial statement reliability and reportable events, are significant red flags in the financial reporting landscape. Such events often lead to increased scrutiny from regulators and investors, potentially impacting market confidence and stock valuation. Companies in the healthcare payment systems sector, like PreAxia, are particularly sensitive to regulatory compliance and financial transparency due to the nature of their operations and the trust required from stakeholders.

Corporate Governance

Stakeholder Impact

• Shareholders: High potential for negative impact due to concerns over financial statement reliability, potential restatements, regulatory scrutiny, and loss of investor confidence.
• Regulatory Authorities (SEC): Increased scrutiny and potential for enforcement actions due to identified errors, missed filing deadlines, and the "reportable event" flagged by the former auditor.
• Management: Faces significant challenges in restoring confidence and resolving accounting issues.
• New Auditor (M&K CPAs): Will face a complex engagement requiring thorough review of past financial statements and resolution of SEC questions.

Next Steps

• M&K CPAs will audit PreAxia's consolidated financial statements as of May 31, 2026.
• PreAxia will continue communications with the US Securities and Exchange Commission Office of Chief Accountant to resolve certain questions.

Key Dates

Recommendation

The filing reveals severe issues with financial reporting integrity, including the former auditor's assertion that previously issued financial statements 'may not be reliable' and the company's termination of the auditor mid-review. The identification of multiple errors, a missed filing deadline, and ongoing discussions with the SEC Office of Chief Accountant indicate significant underlying problems and high regulatory risk. These factors severely undermine investor confidence and suggest a strong likelihood of negative future developments, including potential restatements or enforcement actions.

Keywords

PreAxia Health Care Payment Systems, auditor change, SEC filing, financial statements, accounting errors, corporate governance, Form 8-K/A, Sadler Gibb & Associates, M&K CPAs, financial reporting, regulatory compliance, healthcare payments