Seven Stars Cloud Group Cuts Guidance and Dismisses Its Independent Registered Public Accounting Firm
Kehoe Law Firm, P.C. announces that it is investigating whether Seven Stars Cloud Group, Inc. and certain of its officers or directors violated federal securities laws.
On February 22, 2018, post-market, Seven Stars Cloud Group announced that on February 16, 2018, the Audit Committee of the Board of Directors of Seven Stars Cloud Group, Inc., formerly known as Wecast Network, Inc., approved the dismissal of China-member firm of Grant Thornton International, Grant Thornton (“GT”), as Seven Stars Cloud Group’s (NASDAQ: SSC) independent registered public accounting firm.
According to SSC’s announcement:
[SSC’s] Audit Committee engaged GT in April 2017 as its independent registered public accounting firm. [SSC’s] prior independent registered public accounting firm that issued audit reports on [SSC’s] financial statements as of and for the fiscal years ended 2016 and 2015 did not include an adverse opinion or a disclaimer of opinion in those reports, and those reports were not qualified or modified as to uncertainty, audit scope, or accounting principles.
Since the commencement of GT’s engagement in April 2017 through February 16, 2018, there were no: (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with GT on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events requiring disclosures (as described in Item 304(a)(1)(v) of Regulation S-K), except that GT advised [SSC] of a material weakness in [SSC’s] internal control of financial reporting related to the design, documentation and implementation of effective internal controls over the review of the cash flow forecasts used in assessing the recoverability of licensed content. [Sevn Stars Cloud Group] has authorized GT to respond fully to inquiries of the successor accountant. (Emphasis added)
A letter from SSC’s former certifying accountant, GT, can be viewed by clicking GT letter.
Seven Stars Cloud Group announced on February 23, 2018 that “SSC now foresees full-year 2017 revenue to be in the range of $125 million – $144 million upon the anticipated timely completion of its 2017 audit by BF Borgers CPA PC . . ..” SSC stated that this revenue range “was short of the Company’s earlier and recent guidance,” as well as that “[u]nanticipated personnel issues that led to internal communication and internal administrative oversights that materialized during the Company’s 2017 fiscal year, resulted in what is anticipated to be 2017 revenue that is below prior and recent guidance expectations.” (Emphasis added)
On this news, shares of SSC were down more than 40% during intraday trading on February 23, 2018.
Seven Stars Cloud Group, Inc. Shareholders and Investors
If you purchased, or otherwise acquired, SSC stock shares and have questions or concerns about the securities investigation or your potential legal rights, please contact John A. Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].