04/21/2025 | Press release | Distributed by Public on 04/21/2025 14:06
Item 4.01 | Changes in Registrant's Certifying Accountant. |
Based on information provided by Marcum LLP ("Marcum"), the independent registered public accounting firm of XWELL, Inc., a Delaware corporation (the "Company"), CBIZ CPAs P.C. ("CBIZ CPAs") acquired the attest business of Marcum, effective November 1, 2024. Marcum continued to serve as the Company's independent registered public accounting firm through April 21, 2025. On April 21, 2025, the Company dismissed Marcum as the Company's independent registered accounting firm and, with the approval of the Audit Committee of the Company's Board of Directors, engaged CBIZ CPAs as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2025.
During the fiscal years ended December 31, 2024 and 2023, and through April 21, 2025, the Company did not consult with CBIZ CPAs regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements, or (ii) any matter that was either the subject of a disagreement (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K and the related instructions).
The reports of Marcum regarding the Company's consolidated financial statements for the fiscal years ended December 31, 2024 and 2023, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that the report for the fiscal year ended December 31, 2024 included an explanatory paragraph relating to substantial doubt about the Company's ability to continue as a going concern.
During the fiscal years ended December 31, 2024 and 2023, and through April 21, 2025, the date of Marcum's dismissal, there were (a) no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to such disagreement in its reports and (b) no "reportable events" (as defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions), except for the material weakness in the Company's internal control over financial reporting due to the fact the Company: (i) did not properly design, implement, and consistently operate effective controls over the completeness and accuracy of its accounting for leases under ASC 842, (ii) did not properly design or maintain effective entity level monitoring controls over the financial close and reporting process, (iii) did not design or maintain effective controls over its service organizations and IT vendors; more specifically, the Company did not have controls in place to review the applicable complementary user entity controls described in the service organizations' reports for their potential impact on the Company's financial reporting, (iv) did not design, implement, and consistently operate effective controls over the revenue process; the Company's controls surrounding the revenue reports and reconciliations were not designed and did not operate at a level of precision that would prevent or detect a material misstatement, and (v) did not design, implement, and consistently operate effective controls over its foreign subsidiaries, each as disclosed in the Company's Annual Report for the fiscal year ended December 31, 2024.
The Company provided Marcum with a copy of this Current Report on Form 8-K prior to its filing with the U.S. Securities and Exchange Commission (the "SEC") and requested that Marcum furnish the Company with a letter addressed to the SEC, pursuant to Item 304(a)(3) of Regulation S-K, stating whether it agrees with the above statements and, if it does not agree, the respects in which it does not agree. A copy of the letter, dated April 21, 2025, is filed as Exhibit 16.1 (which is incorporated by reference herein) to this Current Report on Form 8-K.