Item 4.01 Changes in Registrant’s Certifying Accountant
On March 1, 2014 E-Waste Systems, Inc. (the “Company”) was notified by e-mail of the resignation of its independent, public accounting firm, MaloneBailey, LLP, effective that date. The Company’s Board of Directors has accepted the resignation of MaloneBailey LLP
MaloneBailey, LLP has not issued a report on the financial statements of the Company for any period and had only recently been engaged by the Company on December 30, 2013. At the time of resignation, it had not yet released a report or opinion regarding the Company’s financial statements for the fiscal year ended December 31, 2013 or any other period.
As provided in Exhibit 99.1, by letter dated March 3, 2014 MaloneBailey, LLP advised the Company of a concern that certain lease agreements entered into by the Company with several Chinese companies in 2013 appeared to lack substance. As a result, in their opinion, it did not warrant the Company to account for gross revenues and expenses for these China based operations. Their conclusion was based on “review of the lease agreements and an interview with a key management team member that was involved in closing each of the transactions in question and maintained management of the business units”. Further, MaloneBailey, LLP stated that the overstated revenue and expenses could have a material impact on the Company’s consolidated financial statements.
The foregoing matters were raised by MaloneBailey, LLP on February 28
th
, 2014 following which there were several discussions between outside legal counsel for the Company and MaloneBailey, LLP in an attempt to resolve the disagreement over the lease agreements and the statements attributed to Company management. The issue was not resolved. MaloneBailey, LLP resigned by email notification on March 1
st
, 2014. The Company believes there is substance to the lease agreements and the treatment by the Company is correct. The Board of Directors considered the subject matter of the disagreement with the former accountant in that George Qin of MaloneBailey, LLP discussed the matter with Martin Nielson, CEO and sole director of the Company.
The Company has furnished a copy of this Current Report on Form 8-K/A Amendment No. 1 to MaloneBailey, LLP and requested that MaloneBailey, LLP furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above statements and has authorized Malone Bailey to fully respond to any inquiries of the new accountants including, but not limited to, the subject matter of the aforementioned disagreement. Malone Bailey has also been requested to provide the Commission with a letter whether it agrees with the statements contained herein.
On March 5, 2014, the Board of Directors approved the engagement of RBSM Accountants & Advisors (“RBSM”), as its auditors for eWaste Systems, Inc. (the "Company")., The Company shall engage RBSM as its auditor for the Company's fiscal year ending December 31, 2013 and thereafter.