ITEM 4.01 CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Former Independent Registered Public Accounting Firm
On February 28, 2022, the board of directors of Porter Holding International,
Inc. (the "Company") decided to dismiss Friedman LLP ("Friedman") as its
independent registered public accounting firm, effective immediately.
Friedman was engaged as the Company's independent registered public accounting
firm on March 4, 2019. The audit reports of Friedman on the Company's financial
statements as of and for the years ended December 31, 2020 and 2019 contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles, except that the audit
reports included an explanatory paragraph that described factors that raised
substantial doubt about the Company's ability to continue as a going concern.
During Friedman's term of audit engagement from March 4, 2019 to February 28,
2022 the Company had no "disagreements" (as described in Item 304(a)(1)(iv) of
Regulation S-K) with Friedman on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Friedman, would have
caused it to make reference to the subject matter of such disagreements in its
audit reports.
During the Company's two most recent fiscal years, and for the subsequent
interim period through February 28, 2022, there was one "reportable event"
within the meaning of Item 304(a)(1)(v) of Regulation S-K, relating to
disclosure of material weaknesses in the Company's internal control over
financial reporting. As previously reported, the management of the Company
identified following material weaknesses as of December 31, 2020:
(1) the Company did not hold any formal board meetings or shareholders meetings
during the last fiscal year;
(2) the Company does not have an audit committee;
(3) the Company does not have sufficient and skilled in-house accounting
personnel with an appropriate level of technical accounting knowledge and
experience in the application of accounting principles generally accepted in the
United States commensurate with its financial reporting requirements;
(4) the Company does not have appropriate policies and procedures in place to
evaluate the proper accounting and disclosures of key documents and agreements
of revenue process;
(5) the Company has not maintained sufficient internal controls over cash
related controls, including failure to segregate cash handling and accounting
functions and did not require dual signature on the Company's bank accounts.
Alternatively, the effects of poor cash controls were mitigated by the fact that
it had limited transactions in its bank accounts; and
(6) the Company retains copies of all financial data and material agreements;
however there is no formal procedure or evidence of normal backup of its data or
off-site storage of data in the event of theft, misplacement, or loss due to
unmitigated factors. The Company did not implement appropriate information
technology controls.
In accordance with Item 304(a)(3) of Regulation S-K, the Company furnished
Friedman with a copy of this Current Report on Form 8-K on March 2, 2022,
providing Friedman with the opportunity to furnish the Company with a letter
addressed to the U.S. Securities and Exchange Commission ("SEC") stating whether
it agrees with the statements made by the Company herein in response to Item
304(a) of Regulation S-K and if not, stating the respects in which it does not
agree. Attached as Exhibit 16.1 is a copy of Friedman's letter addressed to the
SEC relating to the statements made by the Company in this report.
New Independent Registered Public Accounting Firm
On February 28, 2022, in connection with the dismissal of Friedman, upon the
approval of its board of directors, the Company engaged YCM CPA INC. ("YCM") as
its new independent registered public accounting firm to audit and review the
Company's financial statements, effective immediately.
During the Company's two most recent fiscal years ended December 31, 2021, and
for the subsequent interim period through February 28, 2022, neither the Company
nor anyone on its behalf consulted YCM regarding (i) the application of
accounting principles to a specified transaction, either completed or proposed;
or on the type of audit opinion that might be rendered on the consolidated
financial statements of the Company, and neither a written report nor oral
advice was provided to the Company that YCM concluded was an important factor
considered by the Company in reaching a decision as to the accounting, auditing
or financial reporting issue; or (ii) any matter that was either the subject of
a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a
reportable event as described in Item 304(a)(1)(v) of Regulation S-K.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits:
Exhibit No. Description
16.1 Letter from Friedman LLP, dated March 2, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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