Item 8. Financial Statements and Supplementary Data
Item 8. Financial Statements and Supplementary
Data
The consolidated financial
statements are included in Part IV, Item 15 (a) (1) of this Report.
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Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
On October 14, 2020, Withum
Smith + Brown (“Withum”), SCWorx Corp.’s independent registered public accounting firm, notified SCWorx Corp. (the “Company”
or “Registrant”) that it would no longer be able to provide audit and review services to the Company, effective October 14,
2020. The audit and review services were discontinued for reasons unrelated to the reviews or audited financials of the Company. Withum
had audited the Company’s financial statements since 2019.
Withum’s report on the
Company’s financial statements for the fiscal year ended December 31, 2019 did not contain an adverse opinion or disclaimer of opinion,
nor was such report qualified or modified as to uncertainty, audit scope or accounting principle, except for an explanatory paragraph
relating to a substantial doubt regarding the Company’s ability to continue as a going concern. During the fiscal year ended December
31, 2019, and through October 14, 2020, there were no disagreements with Withum on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to Withum’s satisfaction, would have caused Withum to
make reference to the subject matter of the disagreement in connection with its report.
During the fiscal year ended
December 31, 2019, and through October 14, 2020, there were no “reportable events” as defined under Item 304(a)(1)(v) of Regulation
S-K, except for material weaknesses in internal control over financial reporting.
On October 20, 2020, the Company
appointed Sadler Gibb & Associates, LLC (“SG”) as its new independent registered public accounting firm, effective immediately,
for the fiscal year ending December 31, 2020. This appointment was authorized and approved by the Audit Committee of the Company’s
Board of Directors.
During the fiscal years ended
December 31, 2019 and 2018 and through October 20, 2020, the Company did not consult with SG on the application of accounting principles
to a specified transaction, either completed or proposed, or consult with SG for the type of audit opinion that might be rendered on the
Company’s consolidated financial statements, where a written report or oral advice was provided that SG concluded was an important
factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue. In addition, the
Company did not consult with SG on the subject of any disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related
instructions or on any “reportable events” as identified under Item 304(a)(1)(v) of Regulation S-K.
As previously disclosed in
the Company’s Current Report on Form 8-K filed April 21, 2021, on April 15, 2021, Sadler Gibb & Associates, LLC notified the
Company that it was (i) terminating its engagement to provide audit and review services to the Company, effective April 14, 2021, and
(ii) withdrawing its consent and association with the Completed Interim Review of the consolidated financial statements performed by SG
for the period ended September 30, 2020. SG’s Letter stated that, in reaching this conclusion, it believed that it cannot rely on
the representations of management and that there are disagreements between the Company and SG on matters of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of SG, would have
caused SG to make reference to the subject matter of the disagreement in their reports on the Company’s consolidated financial statements.
The Company disagreed with SG’s belief regarding the representations of management and requested the opportunity to explain its
position to SG, but SG declined such request. The Company and SG also disagreed about the number of reporting units the Company has for
financial reporting purposes. The Company’s CFO discussed with SG the number of reporting units. In addition, the Company engaged
an independent technical accounting expert who also discussed the Company’s position with SG.
On April 19, 2021, the Company
appointed BF Borgers CPA PC (“BFB”) as its new independent registered public accounting firm, effective immediately, for the
fiscal year ending December 31, 2020. This appointment was authorized and approved by the Audit Committee of the Company’s Board
of Directors.
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