8-K: Eightco Holdings Inc. Changes Auditors as Morison Cogen Resigns

Eightco Holdings Inc. has changed its independent auditor from Morison Cogen LLP to Stephano Slack LLC, effective October 4, 2024, following Morison Cogen's decision to exit public company audits.

Summary

• Morison Cogen LLP resigned as the independent registered public accounting firm for Eightco Holdings Inc. on September 30, 2024, due to their exit from providing audit services to publicly traded companies.
• The Audit Committee of Eightco Holdings Inc.'s Board of Directors approved the resignation of Morison Cogen.
• The audit partner and audit manager from Morison Cogen who were in charge of Eightco's audit have joined Stephano Slack LLC.
• Stephano Slack LLC was engaged as the new independent registered public accounting firm for Eightco Holdings Inc. on October 4, 2024, for the fiscal year ending December 31, 2024.
• Morison Cogen's audit reports for the fiscal years ended December 31, 2023 and December 31, 2022 did not contain any adverse opinions or disclaimers, but did express substantial doubt about the company's ability to continue as a going concern due to losses and negative cash flows.
• There were no disagreements between Eightco and Morison Cogen on accounting principles, financial statement disclosure, or auditing scope during the fiscal years ended December 31, 2023 and 2022 and the subsequent interim period through September 30, 2024.
• Eightco did not consult with Stephano Slack LLC on accounting principles or the type of audit opinion before engaging them.

Sentiment

Score: 3

Explanation: The resignation of the auditor due to exiting the public company audit business, combined with the going concern warning, creates a negative sentiment. The change of auditors is not a positive sign and raises concerns about the company's financial health.

Positives

• The transition to a new auditor was approved by the Board of Directors.
• There were no disagreements between Eightco and Morison Cogen on accounting or auditing matters.
• The audit team familiar with Eightco's financials has moved to the new auditing firm, Stephano Slack LLC.

Negatives

• Morison Cogen resigned due to exiting the public company audit business, which may raise concerns about their previous assessment of Eightco's financial health.
• Morison Cogen's reports expressed substantial doubt about Eightco's ability to continue as a going concern.

Risks

• The change in auditors could lead to increased scrutiny of Eightco's financials.
• The going concern warning from the previous auditor may impact investor confidence.
• The company's financial health remains a concern due to losses and negative cash flows.

Future Outlook

The company will be audited by Stephano Slack LLC for the fiscal year ending December 31, 2024.

Management Comments

• The Audit Committee of the Board of Directors approved the resignation of Morrison Cogen.
• The Company engaged Stephano Slack LLC as the Company's new independent registered public accounting firm after receiving approval of the Company's Board of Directors.

Industry Context

Changes in auditors are not uncommon, but the reason for the change, in this case, Morison Cogen exiting the public company audit business, is unusual and may raise concerns. The fact that the audit team moved to the new firm is a positive sign for continuity.

Comparison to Industry Standards

• The resignation of an auditor due to the firm exiting the public company audit business is not a typical event.
• The going concern warning issued by Morison Cogen is a significant concern and is not typical for companies that are considered financially stable.
• The engagement of a new auditor is a standard process, but the circumstances surrounding this change are unique.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the going concern warning.
• Creditors may be more cautious about lending to the company.
• Employees may be concerned about the company's financial stability.

Next Steps

• Stephano Slack LLC will conduct the audit for the fiscal year ending December 31, 2024.

Key Dates

Keywords

auditor, accounting, Morison Cogen, Stephano Slack, audit, financial statements, going concern, resignation