8-K: Value Exchange International's Auditor Resigns Over Unpaid Fees, Company Faces Delinquent Filings

Value Exchange International, Inc. announced its independent auditor, Grassi & Co. CPAs P.C., disengaged due to outstanding fees, leading to delays in critical financial report filings.

Summary

• Value Exchange International, Inc. (Company) received electronic notice on July 1, 2025, from Grassi & Co. CPAs P.C. (Grassi) that Grassi would not perform the audit work for the Company's fiscal year ending December 31, 2024.
• The Company believes the disengagement is a result of past-due, outstanding fees owed to Grassi.
• The Company has initiated the process of identifying a successor independent registered public accounting firm.
• The Company is working to complete and file its past due Form 10-K Annual Report for the fiscal year ended December 31, 2024, and its past due Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.
• During the fiscal year ended December 31, 2023, and subsequent interim fiscal periods in 2024, there were no disagreements with Grassi on accounting principles, financial statement disclosure, or auditing scope/procedure.
• There were also no reportable events as described in Item 304(a)(1)(v) of Regulation S-K.
• Grassi has not issued any report on the Company's financial statements for the fiscal year ended December 31, 2024.
• Grassi confirmed its agreement with the Company's statements regarding its disengagement in a letter dated July 2, 2025, addressed to the SEC.

Sentiment

Score: 2

Explanation: The sentiment is highly negative due to the auditor's disengagement over unpaid fees and the Company's delinquent financial filings, indicating severe financial distress and non-compliance.

Positives

• Grassi & Co. CPAs P.C. confirmed there were no disagreements on accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the fiscal year ended December 31, 2023, and subsequent interim periods in 2024.
• No reportable events were identified by Grassi during the specified periods.
• The Company has begun the process of identifying a successor independent registered public accounting firm.

Negatives

• The Company's independent auditor, Grassi & Co. CPAs P.C., disengaged due to past-due, outstanding fees owed by the Company.
• The Company has past due Form 10-K Annual Report for the fiscal year ended December 31, 2024.
• The Company has past due Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.

Risks

• Risk of non-compliance with SEC filing requirements due to delinquent Form 10-K and Form 10-Q.
• Potential for delisting from an exchange if financial reports are not filed timely.
• Difficulty in securing a new independent registered public accounting firm given the reason for the previous auditor's disengagement (unpaid fees).
• Indication of financial distress or liquidity issues due to inability to pay auditor fees.
• Uncertainty regarding the Company's financial health and operational performance without current audited financial statements.

Future Outlook

The Company's immediate future outlook involves identifying a successor independent registered public accounting firm and completing the necessary work to file its past due Form 10-K Annual Report for fiscal year ended December 31, 2024, and its past due Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.

Management Comments

• The Company believes that the disengagement is the result of a past-due, outstanding fees owed to Grassi.
• The Company is endeavoring to complete necessary work to file its past due Form 10-K Annual Report for fiscal year ended December 31, 2024 and its past due Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.

Industry Context

The disengagement of an auditor due to unpaid fees and subsequent delinquent financial filings are significant red flags in the financial reporting industry, often indicating severe financial distress. This situation contrasts sharply with well-managed companies that maintain timely and transparent financial reporting, and it could lead to increased scrutiny from regulators and investors.

Comparison to Industry Standards

• The disengagement of an auditor due to unpaid fees is a highly unusual and negative event, falling significantly below industry standards for corporate financial health and governance.
• Timely filing of annual (Form 10-K) and quarterly (Form 10-Q) reports is a fundamental requirement for publicly traded companies; the Company's past-due filings indicate a failure to meet basic regulatory compliance standards, unlike most peers.
• While the absence of disagreements on accounting principles is a minor positive, the underlying financial instability leading to auditor resignation overshadows this, placing the Company far below the financial stability benchmarks of comparable companies.

Corporate Governance

Stakeholder Impact

• Shareholders: Face increased risk due to lack of audited financial statements, potential delisting, and uncertainty regarding the Company's financial viability.
• Creditors (including Grassi): May face challenges in recovering outstanding debts.
• Regulatory Authorities (SEC): Will likely increase scrutiny due to non-compliance with filing requirements.
• Employees: May experience uncertainty regarding job security and the Company's future.

Next Steps

• Identify a successor independent registered public accounting firm.
• Complete necessary work to file the past due Form 10-K Annual Report for fiscal year ended December 31, 2024.
• Complete necessary work to file the past due Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.

Key Dates

Recommendation

Keywords

auditor change, SEC filing, Form 8-K, delinquent filings, financial distress, corporate governance, Value Exchange International, Grassi & Co., accounting firm, public company