Medicine Man Technologies, Inc., operating as Schwazze, SHWZ (Cboe CA: SHWZ) announced Monday that its common stock will soon transition to the OTC Expert Market, under the ticker symbol "SHWZ." The Denver-based company said this is due to its delayed filing of its Form 10-Q for the period ended March 31, 2024, with the Securities and Exchange Commission (SEC). The delay was a result of an SEC order regarding the company's previous auditor, BF Borgers CPA PC, who was dismissed as Schwazze's auditor prior to the SEC's order.
In April, Schwazze dismissed BF Borgers as its independent registered public accountant and engaged Baker Tilly US, LLP as its new independent accountant. Subsequent to the transition, on May 3, 2024, the SEC issued an order to BF Borgers and its owner citing the deliberate and systemic failures to comply with public company accounting oversight board("PCAOB") standards in its audits and reviews, which were incorporated in more than 1,500 SEC filings from January 2021 through June 2023 and affected at least 75 percent of BF Borgers' 369 clients.
As a result of the SEC order, the company's new auditor needs additional time to complete its prior period review before the company files its quarterly report for the three months ending March 31, 2024. In addition, Baker Tilly is re-auditing its fiscal year 2023 financial statements and re-reviewing the closing of its 2022 balance sheet prior to filing its 2024 Annual Report. Baker Tilly is actively working to re-audit the company's financial statements for the associated periods.
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The company intends to complete the necessary work to be current in its reporting obligations with the SEC in the coming months.
"Our decision to dismiss BF Borgers as our auditor was a strategic move to bolster our accounting rigor and it proved to be the right decision given the SEC’s subsequent charges on BF Borgers," stated Forrest Hoffmaster, interim CEO of Schwazze. "Although our OTC listing was affected by BF Borgers' actions, we are diligently working with our new auditor to complete the re-audit process in an efficient and timely manner. We are also pursuing recoveries for all fees related to BF Borgers."
As a result of the delayed filing, Schwazze has sought from and is in communication with the Ontario Securities Commission concerning the availability of a management cease trade order (MCTO) in respect of the missed deadline for the quarterly report ending March 31, 2024. If an MCTO is granted, it is expected that the general investing public will continue to be able to trade in the company’s listed common shares, however, the company’s named executive officers will not be able to trade in the company’s common shares.
Price Action
Schawzze shares closed Monday market session 1.27% higher at 40 cents per share.
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