Nano Magic Inc. (OTC Markets:NMGX), a Delaware-based company specializing in coating, engraving, and allied services, has announced a change in its certifying accountant as of June 19, 2024. The company’s Board authorized the engagement of a new audit firm, leading to the dismissal of UHY LLP, which had served as Nano Magic's independent, registered public accounting firm.
The reports from UHY LLP for the fiscal years ending December 31, 2023, and December 31, 2022, did not contain any adverse opinions or disclaimers and were not qualified or modified regarding uncertainty, audit scope, or accounting principles. However, both reports from UHY LLP included a paragraph highlighting substantial doubt about Nano Magic Inc.'s ability to continue as a going concern.
Throughout the most recent fiscal year and the subsequent interim periods up to June 19, 2024, there were no disagreements with UHY LLP on matters of accounting principles or practices, financial statement disclosures, or auditing scope or procedures that would have required mention in the firm's reports. The only exception was a previously disclosed material weakness in the company's internal control over financial reporting due to insufficient resources in the accounting function to ensure segregation of duties.
Nano Magic Inc. has engaged Fruci & Associates II, PLLC as its new independent registered public accounting firm following the Board's approval on June 19, 2024. During the two most recent fiscal years and the subsequent interim periods through June 19, 2024, Nano Magic Inc. had not consulted with Fruci & Associates II, PLLC regarding any accounting principles or transactions, audit opinions on the financial statements, or any disagreements or reportable events as described in Regulation SK.
InvestingPro Insights
In light of Nano Magic Inc.'s recent change in its certifying accountant, a closer look at the company's financial health and stock performance is warranted. According to InvestingPro data, Nano Magic has a market capitalization of $11.53M and is currently trading at a high Price / Book multiple of 18.39 as of the last twelve months leading up to Q1 2024. This valuation metric is particularly relevant as it suggests that the market is assigning a high value to the company's net assets, which could be indicative of investor optimism about future growth or possibly a reflection of the company's unique technology and market position.
However, the company's revenue has seen a decline of 3.26% over the last twelve months as of Q1 2024, and its gross profit margin stands at 13.43%, pointing to challenges in profitability. This aligns with the InvestingPro Tips, which highlight Nano Magic's weak gross profit margins and the fact that it has not been profitable over the last twelve months. Additionally, the company's stock price has experienced significant volatility, with a 138.97% return over the last three months, yet a drop of 15.0% over the last month. These swings in stock price could be of interest to investors looking for short-term opportunities, but they also underscore the potential risks.
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