Item 4.01 |
Changes in Registrant’s
Certifying Accountant. |
On April
4, 2023, KPMG LLP (“KPMG”), the independent registered public accounting firm of Exela Technologies, Inc. (the “Company”),
notified the Company that it has decided to decline to stand for re-appointment as the independent registered public accounting firm
of the Company. However, KPMG will remain the Company’s independent registered public accounting firm until completion of its review
of the consolidated interim financial statements of the Company and subsidiaries as of and for the period ended March 31, 2023. As described below, the
decision to decline to stand for re-appointment as the independent registered public accounting firm of the Company is not the result
of any disagreement with KPMG.
The audit reports of KPMG
on the consolidated financial statements of the Company and subsidiaries as of and for the years ended December 31, 2022 and 2021 did not contain any
adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles,
except as follows:
KPMG LLP’s
report on the consolidated financial statements of Exela Technologies, Inc. and subsidiaries as of and for the years ended December 31,
2022 and 2021 contained a separate paragraph stating that: “The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company
has a history of net losses, net operating cash outflows, working capital deficits, significant cash payments for interest on long-term
debt, and significant current maturities of long-term debt that raise substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.”
KPMG LLP’s
report on the consolidated and combined financial statements of Exela Technologies, Inc. and subsidiaries as of and for the years ended
December 31, 2021 and 2020, contained a separate paragraph stating that: “The accompanying consolidated financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements,
the Company has a history of net losses, net operating cash outflows, working capital deficits, and significant cash payments for interest
on long-term debt and for contingent liabilities that raise substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.”
During the years ended December
31, 2022 and 2021 and the subsequent interim period through April 4, 2023, there were no disagreements within the meaning of Item 304(a)(1)(iv)
of Regulation S-K and the related instructions between the Company and KPMG on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused
KPMG to make reference thereto in their reports. In addition, during the years ended December 31, 2022 and 2021 and the subsequent interim
period through April 4, 2023, there were no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K,
except that in its audit reports on the effectiveness of the Company’s internal control over financial reporting as of December
31, 2022 and 2021, KPMG advised the Company of, and the Company also disclosed in Part II, Item 9A of the Company’s Form 10-K for
the fiscal year ended December 31, 2022 (filed April 3, 2023) and Form 10-K/A for the fiscal year ended December 31, 2021 (filed
November 14, 2022)(collectively, the “Filed 10-Ks”), respectively, certain material weaknesses in the Company’s internal
control over financial reporting, detailed descriptions of which are contained in Part II, Item 9A of each of the Filed 10-Ks, which
Items are hereby incorporated by reference. The Audit Committee of the Company’s Board of Directors engaged in discussions regarding
these material weaknesses with KPMG.
The Company provided KPMG
with a copy of the disclosures in this Current Report on Form 8-K prior to its filing with the Securities and Exchange Commission (the
“Commission”) and requested KPMG furnish it a letter addressed to the Commission stating whether it agrees with the above
statements. A copy of that letter, dated April 10, 2023, is filed as Exhibit 16.1 to this Current Report on Form 8-K.