Item 4.01 Changes in Registrant's Certifying Accountant
Resignation of Independent Registered Public Accounting Firm
On April 12, 2023, the Board of Directors (the "Board") of Avenir Wellness
Solutions, Inc. (the "Company"), a Delaware corporation formerly known as CURE
Pharmaceutical Holding Corp., received a letter from RBSM LLP ("RBSM") that they
resigned as the Company's independent registered public accounting firm for the
year ending December 31, 2022, effective immediately.
The reports of RBSM on the Company's consolidated financial statements for the
years ended December 31, 2021 and 2020 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles, except that each report on the Company's
consolidated financial statements contained an explanatory paragraph regarding
the Company's ability to continue as a going concern based on the Company's
accumulated deficit, recurring losses from operations, and the Company's
expectation of continuing future losses as of December 31, 2021 and 2020.
In their resignation letter to the Company, RBSM cited their: (i) disagreement
with the Company's recognition of revenue generated by the sales of certain
nutraceutical products (the "Products") from The Sera Labs, Inc. ("Sera Labs"),
a wholly-owned subsidiary of the Company, as the principal on a gross basis
under the Financial Accounting Standards Board Accounting Standards Codification
606 ("ASC 606"). RBSM questioned the accounting for certain previously
undisclosed related party transactions involving Sera Labs and Advanced Legacy
Technologies, LLC ("ALT"), an entity beneficially owned and controlled by the
Company's Chief Executive Officer and a member of the Board. The transactions
were not disclosed to RBSM prior to its discovery during its audit testing. RBSM
noted the following: (a) the ALT distribution agreement dated April 1, 2022
between Sera Labs and ALT was established primarily to limit the control over
cash receipts/payments and certain other transactions by the Company's prior
management; (b) the ALT bank account is not titled to the Company and the
Company has no formal contractual rights to the account. The use of a separate
bank account takes away control from existing Company's management and Board;
(c) all cash relating to the Products was run through ALT and ALT received the
cash from sales, directly paid the supplier for the inventory and shipping
costs, directly paid for sales and marketing, and other administrative costs at
ALT; and (d) the Company did not provide any capital to ALT; (ii) uncertainty if
the CEO of Sera Labs had the sole authority in April 2022 to execute the
distribution agreement between ALT and Sera Labs based on no apparent formal
approval by the Board, although it was noted by RBSM that an authorized user on
the ALT account was the CFO of Sera Labs. Also, the Company did not disclose
related party transactions during RBSM reviews for the three and six months
ended June 30, 2022 and the three months ended September 30, 2022; (iii)
statement that the Company's unaudited condensed consolidated interim financial
statements for the three and six months ending June 30, 2022 included in the
Company's June 30, 2022 Quarterly Report on Securities and Exchange Commission
("SEC") Form 10-Q was filed with the SEC on September 2, 2022 and the Company's
unaudited and condensed consolidated interim financial statements for the three
and nine months ended September 30, 2022 included in the Company's September 30,
2022 Quarterly Report on SEC Form 10-Q was filed on November 21, 2022 - both of
which omitted related party disclosures pursuant to the ALT transactions; and
(iv) belief that the Company stating that they believed the RBSM engagement
partner acted negligently in conducting the audit and questioning the Company's
assertion and presentation of the revenues generated by the sales of the
Products, was a threat to the firm's independence under PCAOB standards.
The Company disagrees with RBSM's assertions in its resignation letter based on
the relevant facts and circumstances of Sera Labs' use of ALT's bank account,
including, but not limited to, the fact that ALT was an inactive company and
that Sera Labs used ALT's bank account in good faith solely to pay vendors on a
timely basis, and that the Company's Chief Financial Officer was an authorized
signer on the account with unfettered access. Moreover, a report was prepared by
an independent subject matter expert introduced to the Company by RBSM that
agreed with the Company's recognition of revenue of its Products as the
principal under ASC 606. Furthermore, management disagrees that the
aforementioned use of the ALT bank account by Sera Labs should be deemed to be a
related party transaction that would otherwise require disclosure; and
management does not believe that any communications with the RBSM engagement
partner constituted a threat, nor was it intended to be a threat.
The Company has authorized RBSM to respond fully to the inquiries of the
successor accountant concerning the subject matter of each of such
disagreements.
The Company provided RBSM with a copy of the disclosures in this Current Report
on Form 8-K. The Company requested that RBSM furnish a letter addressed to the
SEC stating whether or not it agrees with the statements made herein. A copy of
RBSM's letter to the SEC is filed as Exhibit 16.1 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description of Exhibit
16.1 RBSM LLP letter, dated April 19, 2023
104 The cover page from this Current Report on Form 8-K, formatted in
Inline XBRL.
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