Item
4.01. Changes in Registrant’s Certifying Accountants
(a)
|
On
February 15, 2017, the Board of Directors of Kiwa Bio-Tech Products Group Corporation (“Kiwa” or “Company”)
decided to engage DYH & Co. as independent principal accountant and auditor to report on the Company’s financial
statements for the fiscal year ended December 31, 2016, including performing the required quarterly reviews.
|
In
conjunction with the new engagement, the Company has dismissed its former accountant, Paritz & Co., P.A., Hackensack, NJ (“Paritz”),
as the Company’s principal accountant effective February 22, 2016. Paritz has served the Company well since 2013. Under
Item 304 of Regulation S-K, the reason for the auditor change is dismissal, not resignation nor declining to stand for re-election.
During
the two most recent fiscal years and the interim period through the date of the dismissal, there were no disagreements with Paritz
on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements,
if not resolved to Paritz’s satisfaction, would have caused Paritz to make reference to the subject matter of the disagreements
in connection with its reports.
During
the two most recent fiscal years through the date of dismissal, the reports of Paritz did not contain any adverse opinion or disclaimer
of opinion, or was modified as to uncertainty, audit scope, or accounting principles other than the following:
1)
The Report of Independent Registered Public Accounting Firm issued by Paritz on June 25, 2015 with respect to the
Company’s audited financial statements for the year ended December 31, 2014 contained the following
statement:
“The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 3 to the consolidated financial statements, the Company’s current liabilities substantially exceeded its current
assets by $8,944,097 at December 31, 2014. The Company had no sales during the years ended December 31, 2014 and 2013, had an
accumulated deficit of $18,608,154 and stockholders’ deficiency of $10,807,861 as of December 31, 2014. These circumstances,
among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans
in regard to these matters are described in note 3. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.”
2)
The Report of Independent Registered Public Accounting Firm issued by Paritz on April 1, 2016 with respect to the
Company’s audited financial statements for the year ended December 31, 2015 contained the following
statement:
“The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 3 to the consolidated financial statements, the Company’s current liabilities substantially exceeded its current
assets by $9,330,130 at December 31, 2015. The Company had no sales during the years ended December 31, 2015 and 2014, had an
accumulated deficit of $20,324,812 and stockholders’ deficiency of $11,100,454 as of December 31, 2015. These circumstances,
among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans
in regard to these matters are described in note 3. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.”
3)
Paritz has periodically communicated to the Company, which the Company has reported in its filings with the U.S. Securities
and Exchange Commission, the existence of a material weakness in the Company’s internal controls over its financial
reporting. The specific material weaknesses identified as of December 31, 2015 was described as follows:
|
●
|
The
Company did not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge
and experience in the application of accounting principles generally accepted in the United States of America commensurate
with the Company’s financial reporting requirements, which resulted in a number of internal control deficiencies that
were identified as being significant. The Company’s management determined that the number and nature of these significant
deficiencies, when aggregated, constituted a material weakness.
|
|
●
|
The
Company lacks qualified resources to perform the internal audit functions properly. In
addition, the scope and effectiveness of the Company’s internal audit function
are yet to be developed.
|
|
|
|
|
●
|
The
Company does not currently have an audit committee.
|
The
Company has acknowledged these material weaknesses and concluded that, while such material weaknesses exist, in light of the Company’s
financial situation and limited operations, the risks associated with the dependence upon Mr. Sharpe as compared to the potential
benefits of adding new employees, does not justify the expense that would need to be incurred to remedy this situation.
During
the two most recent fiscal years, there were no reportable events (as defined in Regulation S-K Item 304(a)(1)(v)).
The
Company has requested that Paritz furnish it with a letter addressed to the Securities and Exchange Commission (“SEC”)
stating whether or not Paritz agreed with the above statements. A copy of Paritz’s response letter will be filed as an amendment
to this Form 8-K.
(b)
|
On
February 15, 2017, the Company approved the engagement of DYH & Co. as the Company’s new independent registered
public accounting firm for the fiscal year ending December 31, 2016. During the two most recent fiscal years and the subsequent
interim period through the date of the dismissal of Paritz, the Company did not consult with DYH & Co. regarding any matters
described in Item 304(a)(2)(i) or (ii) of Regulation S-K.
|