8-K: Kineta Inc. Changes Accounting Firms, Engaging CBIZ CPAs After Marcum LLP Resignation

Kineta Inc. announces the resignation of Marcum LLP as its independent auditor and the engagement of CBIZ CPAs, effective March 27, 2025.

Summary

• Kineta Inc. has changed its independent registered public accounting firm from Marcum LLP to CBIZ CPAs, effective March 27, 2025.
• Marcum LLP resigned on March 27, 2025, and CBIZ CPAs was engaged on the same day for the fiscal year ending December 31, 2025.
• The Audit Committee of Kineta's Board of Directors approved the engagement of CBIZ CPAs.
• The CBIZ CPAs audit team is expected to be substantially the same as the team that previously serviced Kineta from Marcum.
• Marcum's reports on Kineta's financial statements for the fiscal years ended December 31, 2024 and 2023 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, except for an explanatory paragraph in 2024 regarding substantial doubt about Kineta's ability to continue as a going concern.
• There were no disagreements between Kineta and Marcum on accounting principles, practices, financial statement disclosure, or auditing scope or procedure during the two most recent fiscal years and the subsequent interim period through March 27, 2025.
• The company concluded on material weaknesses in the company's internal control over financial reporting as of December 31, 2024 and 2023 related to complex financial instruments, allocated facilities costs, warrants issued to certain existing stockholders, offering costs and accounting for the exclusivity payments related to a business combination.

Sentiment

Score: 5

Explanation: The change in auditors is neutral, but the mention of 'going concern' and material weaknesses is concerning.

Positives

• The transition to CBIZ CPAs is expected to be seamless, with the same audit team initially servicing the Company.
• Marcum LLP agreed with the statements made by Kineta, Inc. regarding their firm in the Form 8-K.

Negatives

• Marcum's report for the fiscal year ended December 31, 2024, included an explanatory paragraph regarding substantial doubt about Kineta's ability to continue as a going concern.
• The Company concluded on material weaknesses in the Company's internal control over financial reporting as of December 31, 2024 and 2023.

Risks

• The material weaknesses in internal control over financial reporting could lead to errors or irregularities in financial statements.
• The explanatory paragraph in Marcum's report regarding the Company's ability to continue as a going concern could impact investor confidence.

Future Outlook

The Company anticipates that the CBIZ CPAs audit team that will service the Company will initially be substantially the same as the audit team from Marcum that previously serviced the Company.

Industry Context

Changes in accounting firms are not uncommon, especially following acquisitions or mergers within the accounting industry. Companies often seek to ensure continuity and expertise during such transitions.

Comparison to Industry Standards

• The Big Four accounting firms (Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers) are generally considered the gold standard for auditing large, multinational corporations.
• However, many smaller and mid-sized companies use firms like Marcum LLP and CBIZ CPAs, which are reputable and experienced in auditing companies of similar size and complexity to Kineta.
• The presence of a 'going concern' paragraph is not uncommon for companies in the biotechnology industry, especially those that are pre-revenue or have significant research and development expenses.

Stakeholder Impact

• Shareholders may be concerned about the change in auditors and the 'going concern' paragraph.
• Employees may experience some uncertainty during the transition, but the Company anticipates that the CBIZ CPAs audit team that will service the Company will initially be substantially the same as the audit team from Marcum that previously serviced the Company.

Key Dates

Keywords

accounting firm, CBIZ CPAs, Marcum LLP, independent auditor, financial statements, audit, Kineta Inc.