Ispire Technology Inc. switches to new auditor

Ispire Technology Inc. (NASDAQ:ISPR), a company specializing in the manufacturing of cigarettes with a market capitalization of $249 million, announced a change in its independent registered public accounting firm. The company’s stock has declined 59% over the past year and currently trades near its 52-week low of $4.15. According to InvestingPro data, the company faces profitability challenges with negative EBITDA of $20.9 million. On Monday, the Audit Committee of the Board of Directors approved the dismissal of CBIZ (NYSE:CBZ) CPAs and the appointment of Marcum Asia CPAs LLP as the new auditor for the fiscal year ending June 30, 2025.

The company, headquartered in Los Angeles, CA, had not received an audit report from CBIZ CPAs prior to their dismissal. From the time CBIZ CPAs was appointed on December 17, 2024, until their dismissal on February 18, 2025, there were no disagreements over accounting principles or practices, or auditing scope or procedures that would have warranted a mention in their report.

The company did disclose material weaknesses in internal control over financial reporting in its quarterly report for the period ended December 31, 2024. These weaknesses pertained to inadequate controls for recording assets acquired from a controlling stockholder, evaluating significant estimates, and a lack of comprehensive accounting policies and procedures. InvestingPro analysis reveals a weak overall financial health score of 1.5 out of 5, with particularly low scores in profitability and price momentum metrics. Additionally, there was a noted deficiency in the number of personnel with the necessary technical expertise to evaluate complex accounting matters.

Ispire Technology did not consult with Marcum Asia regarding the application of accounting principles to a specific transaction or the type of audit opinions that might be rendered on the company’s financial statements before their appointment.

In compliance with regulatory requirements, Ispire Technology provided CBIZ CPAs with a copy of the report detailing these changes before filing it with the SEC and has included a letter from CBIZ CPAs, dated today, as part of its SEC filing, stating their agreement or disagreement with the company’s statements.

This corporate update is based on a press release statement and reflects the ongoing changes within Ispire Technology’s financial governance structure. Investors awaiting the company’s next earnings report on May 14, 2025, can access comprehensive analysis and additional insights through InvestingPro, which offers detailed financial health metrics and expert research reports for over 1,400 US stocks.

In other recent news, Ispire Technology reported a net loss of $8 million for the fourth quarter of 2024, with earnings per share (EPS) of -$0.14, missing the forecasted $0.01. Despite the earnings miss, the company achieved a slight revenue increase of 0.3% year-over-year, reaching $41.8 million. The gross margin improved to 18.5%, up from 15% in the previous year. Revenue from the U.S. saw a significant decline of 45%, primarily due to decreased cannabis sales, while European revenue experienced strong growth. Tiger Securities recently revised their outlook on Ispire Technology, cutting the stock target to $5.50 but maintaining a Hold rating, citing delays in the company’s timeline to reach break-even. Ispire is moving operations from the U.S. to Malaysia and Hong Kong, aiming for $8 million in annual cost savings, although this transition will incur one-off expenses. The company is also preparing a Pre-Market Tobacco Application (PMTA) for a novel nicotine delivery system, planned for submission in April 2025. Additionally, Ispire is expanding its presence in Africa and preparing new product launches in the UK, reflecting its strategic initiatives for international growth.

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