PreAxia Health Care Payment Systems Inc. Files Key 8-K/A: Resignation of Auditor and Reliability Issues with Financial Statements

Summary of Key Points

• Auditor Change: The company’s independent registered public accounting firm, Sadler Gibb and Associates, has resigned.
• Material Errors Identified: Sadler Gibb found multiple errors in PreAxia’s previously issued financial statements for the quarter ended August 31, 2025, and was reviewing potential errors for the year ended May 31, 2025.
• Reliability Concerns: Due to insufficient audit evidence and unresolved questions, the auditor communicated to management that financial statements for both periods may not be reliable.
• Company Terminated Auditor Engagement: PreAxia terminated communications and engagement with Sadler Gibb before review procedures were completed.
• Regulatory Disclosure: Sadler Gibb states the circumstances surrounding their termination constitute a “reportable event” under SEC Regulation S-K Item 304(a)(1)(v).
• Relevant Exhibits: Letters from Sadler Gibb, Fruci & Associates II PLLC, and GreenGrowth CPAS are included as exhibits, providing further context and auditor opinions.
• Emerging Growth Company Status: PreAxia does not qualify as an “emerging growth company.”

Investor-Relevant Details

Auditor Resignation and Reliability of Financial Statements: This filing reveals that PreAxia Health Care Payment Systems Inc. is facing significant accounting and audit issues. Sadler Gibb and Associates, the recently resigned auditor, has publicly stated that during their review they identified multiple errors in the company’s financial statements for the quarter ended August 31, 2025. Additionally, the firm was investigating possible errors for the year ended May 31, 2025. Sadler Gibb was unable to complete its review due to the company terminating its engagement before conclusion.

Most notably, Sadler Gibb communicated to PreAxia management that, without sufficient audit evidence to support the accounting treatments under review, the financial statements for both May 31, 2025 and August 31, 2025 may not be reliable. This is a highly material development for shareholders, as the reliability of financial statements is essential for investor confidence and accurate valuation.

The nature of the discussions and the termination of the auditor engagement are characterized as a “reportable event” under SEC rules, suggesting potential regulatory scrutiny and risk.

Exhibits and Auditor Letters: The company has included important exhibits:

• Letter from Sadler Gibb and Associates (Feb 26, 2026) stating their position and reliability concerns.
• Letter from Fruci & Associates II PLLC (Dec 9, 2025).
• Letter from GreenGrowth CPAS (Oct 29, 2024).

These letters may provide further insight into the circumstances and opinions of the auditors regarding PreAxia’s financial reporting.

Potential Price Sensitivity: This news is likely to be highly price sensitive. The resignation of an auditor, coupled with explicit concerns about the reliability of financial statements, can have a direct and negative impact on investor confidence and share price. The issues could also prompt regulatory review, restatement of financials, or other remedial actions.

Other Regulatory Disclosures

• The company has confirmed it is not an “emerging growth company,” and has not elected to use the extended transition period for new or revised accounting standards.
• No written communications pursuant to Rule 425, soliciting materials under Rule 14a-12, or pre-commencement tender offer communications under Rules 14d-2(b) or 13e-4(c) are being made.

Shareholder Takeaways

• Material Uncertainty: There is material uncertainty regarding the company’s financial statements for at least two recent periods.
• Risk of Restatement: Investors should be prepared for possible restatements or further corrections to financial disclosures.
• Regulatory Attention: The “reportable event” classification increases the risk of SEC involvement or investigation.
• Confidence Impact: These developments may affect the company’s access to capital, partnership prospects, and share price.

Disclaimer

The information provided in this article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. The article is based on publicly available SEC filings as of the date indicated, and circumstances may change. The author assumes no liability for the accuracy or completeness of this information.

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