8-K: Vystar Corporation Dismisses and Replaces Auditor Following SEC Ban

Vystar Corporation dismissed its recently engaged auditor, BFBorgers, after the SEC barred the firm and its partner, and subsequently re-engaged MGO as its auditor.

Summary

• Vystar Corporation dismissed BFBorgers as its independent registered public accounting firm on May 3, 2024, due to an SEC order barring the firm and its partner from practicing before the Commission.
• BFBorgers did not provide any accounting services to Vystar before its dismissal, so the change has no impact on the company's financial statements.
• The SEC advised that Vystar did not need a letter from BFBorgers due to the SEC's order.
• Vystar re-engaged Marcias Gini & O'Connell, LLP (MGO) as its independent public accounting firm effective June 4, 2024.
• MGO had previously served as Vystar's auditor before resigning on December 6, 2023.
• There were no disagreements or reportable events between Vystar and MGO during their previous engagement.

Sentiment

Score: 3

Explanation: The document highlights a negative event with the dismissal of an auditor due to an SEC ban, which raises concerns about the company's governance and financial reporting. The re-engagement of a previous auditor is a positive, but the overall sentiment is negative.

Positives

• The change in auditors does not impact Vystar's financial statements as BFBorgers did not provide any services.
• Vystar was able to quickly re-engage a previous auditor, MGO, with whom they had a positive working relationship.
• There were no disagreements or reportable events between Vystar and MGO during their previous engagement.

Negatives

• Vystar had to dismiss its recently engaged auditor, BFBorgers, due to an SEC ban.
• The SEC ban on BFBorgers raises concerns about the firm's practices and reliability.

Risks

• The dismissal of BFBorgers could raise concerns about Vystar's due diligence process in selecting auditors.
• The need to change auditors could cause a delay in the filing of financial statements.
• The SEC action against BFBorgers could lead to increased scrutiny of Vystar's financial reporting.

Future Outlook

There is no future outlook provided in this document.

Management Comments

• The Company was promptly required to dismiss BF Borgers as its independent registered public accounting firm effective May 3, 2024.
• BFBorgers did not provide any accounting services to the Company prior to its dismissal, and thus, such engagement and dismissal has no effect on the Company's financial statements.
• The Company re-engaged Marcias Gini & O'Connell, LLP (MGO) as its independent public accounting firm.

Industry Context

The change in auditors is not uncommon, but the circumstances surrounding the dismissal of BFBorgers due to an SEC ban is unusual and could raise concerns about the company's governance and financial reporting.

Comparison to Industry Standards

• The dismissal of an auditor due to an SEC ban is not a typical event and is not comparable to standard auditor changes.
• Most companies change auditors due to disagreements or strategic reasons, not due to the auditor being barred by the SEC.
• The re-engagement of a previous auditor is not uncommon, but the circumstances of MGO's re-engagement are unusual due to the prior resignation and the need to replace a recently engaged auditor.

Legal Proceedings

• The Securities and Exchange Commission (the Commission) issued an order reporting that it had settled administrative and cease-and-desist proceedings against BF Borgers, and its sole audit partner, Benjamin F. Borgers CPA, permanently barring BF Borgers and Mr. Borgers from appearing or practicing before the Commission as an accountant.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the circumstances surrounding the dismissal of BFBorgers.
• The company's reputation may be negatively impacted by the SEC action against its former auditor.

Key Dates

Keywords

auditor, BFBorgers, MGO, SEC, accounting firm, financial statements, independent auditor, dismissal, re-engagement