Section 4.01. Change of certifying accountant of the declarant.
(a) Resignation of Independent Certified Public Accountants.
BDO’s reports on the Company’s consolidated financial statements for the years ended
During the fiscal years ended
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
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, 2020until 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. 2
Significant weaknesses have been discussed with the audit committee. The Company has authorized BDO to respond fully to requests for
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
(b) Engagement of New Independent Chartered Accountants.
Following the bidding process described above, the
Over the past two financial years and up to the date of commitment, the Company has not consulted
(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
(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, 2022104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 3
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