Sunstock, Inc. (OTC:SSOK), a retail variety store operator, has engaged TAAD, LLP as its new independent registered public accounting firm for the fiscal year ending December 31, 2024, as announced today. The decision was made by the company's Board of Directors on October 31, 2024, and took immediate effect.
This move follows a notification from the company's former accounting firm, Fruci & Associates II, PLLC ("Fruci"), on September 6, 2024. Fruci informed Sunstock that the company no longer aligned with Fruci's future practice direction, suggesting that Sunstock secure a different audit firm.
Fruci's audit report for the fiscal year ended December 31, 2023, did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified regarding uncertainty, audit scope, or accounting principles. However, it did include an explanatory paragraph concerning Sunstock's ability to continue as a going concern.
Throughout the fiscal year 2023 and up to the date of Fruci's resignation, there were no reported disagreements between Sunstock and Fruci on matters of accounting principles, practices, financial statement disclosure, or auditing scope and procedures that would have warranted a mention in Fruci's report if unresolved.
Sunstock provided Fruci with a copy of this report before filing it with the U.S. Securities and Exchange Commission (SEC) and requested Fruci to furnish a letter to the SEC stating whether it agrees with the statements made. Fruci's letter, dated November 1, 2024, is included as Exhibit 16.1 in the current report, confirming their agreement with Sunstock's statements regarding the change.
InvestingPro Insights
To provide additional context to Sunstock, Inc.'s (OTC:SSOK) recent change in accounting firms, let's examine some key financial metrics and insights from InvestingPro.
According to InvestingPro data, Sunstock has a market capitalization of $1.59 million USD, indicating it's a micro-cap company. This small size aligns with the company's description as a retail variety store operator and provides context for why it might be changing accounting firms to better suit its scale and needs.
InvestingPro Tips highlight that Sunstock is trading at a low earnings multiple, with a P/E ratio of 4.98 for the last twelve months as of Q2 2024. This could suggest that the stock is undervalued relative to its earnings, which might be of interest to value-oriented investors.
However, it's important to note that the company suffers from weak gross profit margins, as indicated by another InvestingPro Tip. The gross profit margin for the last twelve months as of Q2 2024 stands at just 5.14%, which could explain the company's need to focus on financial management and potentially why it's seeking a new accounting firm that might better assist with improving profitability.
Despite these challenges, Sunstock has shown strong recent performance, with a 62.49% price return over the last month and a remarkable 217.37% return over the past year. This volatility and recent positive momentum could be factors in the company's decision to ensure its financial reporting is robust and aligned with its current trajectory.
For investors interested in a more comprehensive analysis, InvestingPro offers 14 additional tips for Sunstock, providing a deeper understanding of the company's financial health and market position.
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