Home Accountant BURGERFI INTERNATIONAL, INC. : Changes to Chartered Accountant, Financial Statements and Supporting Documents (Form 8-K)

BURGERFI INTERNATIONAL, INC. : Changes to Chartered Accountant, Financial Statements and Supporting Documents (Form 8-K)

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Section 4.01. Change of certifying accountant of the declarant.

(a) Resignation of Independent Certified Public Accountants.

On April 15, 2022the audit committee of the board of directors (“audit committee”) of BurgerFi International, Inc. (the “Company”) has initiated a competitive process to determine the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2022 and distributed a request for proposals (“RFP”) to several qualified accounting firms, including
BDO USA, LLP (“BDO”), the Company’s independent registered public accounting firm at the time.

On May 6, 2022BDO has advised the Company (the “BDO Notice”) that the client-auditor relationship between the Company and BDO will cease upon BDO’s review of the unaudited condensed quarterly consolidated financial statements for inclusion in the Company’s Form 10-Q. for the period ended March 31, 2022 and procedures related to BDO’s consent for the inclusion of its auditor’s report in the company’s franchise disclosure filings with various state regulators on or about May 20, 2022. The Company has deemed the BDO Notice to constitute a resignation of BDO as a registered independent public accounting firm of the Company as of the periods indicated in the BDO Notice.

BDO’s reports on the Company’s consolidated financial statements for the years ended December 31, 2021 and 2020 did not contain an adverse opinion or disclaimer of opinion, and have not been qualified or modified as to uncertainty, scope of the audit or accounting principles.

During the fiscal years ended December 31, 2021 and 2020, and up to the date of BDO’s resignation, there has been (i) no “disagreement” (as that term is defined in Section 304(a)(1)(iv) of the Regulations SK and related instructions) between the Company and BDO on any matter relating to accounting principles or practices, financial statement disclosure or the scope or procedure of an audit which, if unresolved to BDO’s satisfaction, would have caused BDO to refer to the subject matter of the disagreement in connection with its reports on the Company’s consolidated financial statements for those years and (ii) no “reportable event” as that term is defined in Section 304(a)(1)(v) of Regulation SK, except for material weaknesses in the Company’s internal control over reporting previously disclosed in Part II, Item 9A “Controls and Procedures” in the company’s annual report on Form 10-K for the fiscal year ended
December 31, 2021. The material weaknesses were:

2021. A material weakness related to the design and implementation of controls over the accounting for income taxes. Specifically, management did not maintain control over the Company’s assessment of its ability to realize historical deferred tax assets on its acquired businesses pursuant to Section 382 of the Internal Revenue Code and the controls The Company’s tax provisions have not been designed to detect certain errors and omissions in calculating the impact of certain transactions on the income tax provision during the period. This material weakness resulted in the identification of errors which have been corrected in the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

2020. A number of material weaknesses in our internal control over financial reporting, as follows:

     •    lack of controls over the financial closing and reporting process
          relating to a sufficient segregation of duties in the preparation of our
          financial statements and related notes, and, for period (the "Successor
          Period") from December 16, 2020 until December 31, 2020, the valuation
          and recognition of stock-based compensation and warrant liabilities;



     •    lack of resources to perform and review the application of accounting
          standards for revenue, leases, and variable interest entities ("VIEs");



     •    specifically with respect to VIEs, our internal control over financial
          reporting failed to detect errors related to consolidating variable
          interest entities for which we are the primary beneficiary;



     •    lack of effective controls over the accounting for deferred rent and
          accounting for initial franchise fees and brand development revenue in
          connection with the adoption of our new revenue recognition standard; and



     •    lack of controls during the Successor Period related to the valuation of
          contingent consideration issued in the business combination with BurgerFi
          International, LLC.



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Significant weaknesses have been discussed with the audit committee. The Company has authorized BDO to respond fully to requests for KPMG srl (“KPMG”), the Company’s successor accountant as described below, regarding material weaknesses.

The Company has provided BDO with a copy of this Form 8-K and has requested that BDO provide the Company with a letter addressed to the Security and Exchange Commission indicating whether or not BDO agrees with the above information. A copy of BDO’s letter, dated May 12, 2022is attached as Exhibit 16.1 to this Form 8-K.

(b) Engagement of New Independent Chartered Accountants.

Following the bidding process described above, the May 10, 2022the audit committee has engaged KPMG as the registered independent public accounting firm of the Company for the year ending December 31, 2022effective once BDO has completed the procedures described above.

Over the past two financial years and up to the date of commitment, the Company has not consulted KPMG concerning either:

(i) The application of accounting principles to any transaction specified, performed or proposed, or the type of audit opinion which might be given on the financial statements of the Company, and neither a written report has been provided to the Company or oral notice has been provided to that effect KPMG concluded was an important factor considered by the Company in making a decision on the accounting, auditing, or financial reporting matter; or

(ii) Any matter that has been the subject of a “disagreement”, as defined in Rule 304(a)(1)(iv) of the SK Regulations and related instructions in Rule 304 SK, or a “Reportable Event”, as that term is explained in Rule 304(a)(1)(v) SK.

Item 9.01 Financial statements and supporting documents.


(d)  Exhibits

Exhibit
Number       Description

16.1           Letter from BDO, dated May 12, 2022

104          Cover Page Interactive Data File (embedded within the Inline XBRL
             document).



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