Letter to Shareholders
April 29, 2018
Re: Audit Update
Apologies for the delayed update. It has been an extremely busy time here as I am sure most can imagine.
The company originally decided to embark on the voluntary audit process in August of last year, with the intent to increase shareholder value by providing increased transparency into our financials which would ultimately attract more retail and institutional investment into the company to further fuel our success. We then planned a subsequent spinoff and dividend back to our shareholders, to provide a further return on their investment in appreciation of their ongoing support through the exciting growth period the company has continued on for the past couple years.
None of these plans have changed.
Granted, there has been some delays, miscommunications (unintentional), and much more back-and-forth between the company and the auditors than originally anticipated due to the complexity of the file having so many various aspects and moving parts along with this being the first audit done with RBSM and going back a number of years.
Further, I’ve personally had plenty off ‘egg on my face’ by relaying info as I received it, and the timelines and completion dates not being met. For this I take full responsibility.
The audit has indeed been an arduous journey. After the first timeline had to be extended and resultantly extended again it evolved into a damned if you do, damned if you don’t scenario when providing updates on progress. We tried to keep providing the extended timelines we were being told, which in some instances upset a portion of shareholders, and then we tried saying that the audit will be done when its done and we didn’t want to keep updating timelines and having them wrong, upsetting this portion of shareholders even more. Then we realized this approach was also upsetting to another portion of shareholders who welcomed the updates because they at least knew the audit was still in progress and being worked on, with an eventual end in sight. So, I once again relayed what was being told to us as I always felt the most transparent approach is the best, whether the timelines were ultimately met or not.
In hindsight this whole process created an overall ‘let down effect’ as each time we were given the new deadline, we truly believed it was going to be met, and therefore no reason not to pass on the information. If it could have been done differently I would have preferred to say nothing about the process the entire way through and just file once completed, however I am sure there is still a large portion of shareholders that would still prefer to know what we are hearing as opposed to being left in the dark on what occurs behind the scenes. Unfortunately, there is no way to please all when we are found in a situation of continued extended deadlines and how information is being relayed. Ultimately, I chose the path of complete openness and transparency regarding the process. This is why I am providing a more detailed update tonight, as being silent on the topic appears to cause the creation of wild theories in the minds of some as to why there are the delays. (I.E. “a major underlying problem to the statement which is causing the delays” - which is absolutely NOT the case.)
As previously mentioned, the audit itself is done. We are finished the process of going through supporting documentation and getting confirmations and running through the background of the financial statements. The statements themselves are not changing and have not been changed to any meaningful degree. To get to that point took many months of back and forth and what originally ended up extending the deadline.
The recent delay has been the footnotes, disclosures and wording of the document. This is the last item that is being worked on and when this is exactly how the auditors want it to read, is when this process will be complete and ready to file. This may seem like a simple process, but the truth of the matter is that it is not. There are many ways to word the same footnote, however RBSM is very meticulous with every detail, which I understand and can appreciate, however if it is not exactly how they want it to read then it gets sent back for adjustments. Auditors are not allowed to simply tell you how to make the adjustments or even in some cases which sections require adjustment, only that adjustments are required. PCAOB standards are forever evolving and in order to save time and cost we were originally using a lot of the formatting and layouts from the last company audit in order to attempt to fast track through the wording and get to completion.
Since we kept winding closer and closer to completion, we figured that everything was fine and to continue with this approach as appeared the next date would be met, and finally put this behind us and move forward. When Thursday came around last week and there was yet more adjustments needed to the wording, we figured enough was enough. We decided that to just get this done we would have another set of eyes look at it to polish it up, make it perfect to what RBSM wants to see versus any other style or format and get this done for good or who knows how long this may end up dragging out ‘one more week’ for. It felt like we were in an infinite loop of ‘one more week because of adjustments’.
At the end of the day Thursday, I reached out to a company that was highly recommended to us called the CFO Squad. They immediately jumped on the file and one of the lead members conducting the ‘polishing up’ of the statements is a gentleman who worked for RBSM and more specifically, was trained by and worked under our lead auditor at RBSM for ten years. This person knows exactly what is needed to make the final few adjustments to have it look exactly how RBSM wants it to look and read in order to have the process completed. They assured us that by Tuesday or Wednesday of this week they would be done making these adjustments. It then goes back to RBSM which should be for the final time and then upon approval we can finally submit the completed audit, put this to rest, and continue moving forward. As for the missed deadlines and dates we were originally provided and the resultant egg on face that occurred, we feel that we have now gotten down to the bottom of the constant back and forth regarding the wording and that this one time ‘polish up’ will provide the required finishing touches for submission.
These type of updates, as I am sure can be gathered, are not fun to write. However, this is the exact situation as it stands today. We are confident that by having the CFO Squad put the final touches on and polish up our wording throughout the document, we can finally safely say that this will be filed once they have completed their proof read / look through in the coming days.
The company as well as myself as CEO, will remain committed to the shareholders and over the coming weeks and months I hope we will all be able to once again focus on all of the positives that the company continues to achieve, as the delays with this one item have certainly clouded and taken away from what the company is accomplishing and executing on. It is now time to move forward. I could not ask for better management, employees and shareholders to continue our mission to grow and exceed expectations. Having the CFO Squad put the final touches on the audit so that we can get this submitted and put behind us will pave the way for the shift in focus back to what really matters in my eyes, the company and its future, not the auditing of last years numbers. This process only happens once, moving forward 99% of the legwork will have been completed in this audit in terms of all the written portion, which makes up the vast majority of the document to be filed. As a company, we have also learned a lot as a result of this delay and have taken measures to ensure we don’t run into delays with regards to future financials. We are right here at the finish line, we just needed that final push. The CFO Squad will continue to be retained throughout future audits to ensure a seamless and speedy execution and completion moving forward preventing any delays.
These are historic days for Amfil Technologies Inc. and we all look forward to providing the best possible results as we can for shareholders and the company. We will undoubtedly have additional hurdles to contend with in the future and we believe in the end we will prevail. We will continue to do our best to refine our strategies moving forward as to prevent us from encountering delays such as these that have caused distraction from what the company has and continues to accomplish.
We thank all of our shareholders for being a part of our company, and we are all very excited with what is going on and what is developing for the future. The same way we moved past the delays of our third location, “Midtown’ in Toronto, ON opening, we now will do the same with the audit in the coming days. We are happy to report that the company has many moves being made that should benefit all shareholders in a positive way with our overall goals of listing on a major exchange now that much closer. Expect updates on all subsidiary fronts in the near future. We appreciate everyone’s support very much and look forward to making up for the extended audit process in a more than stellar fashion once completed. Thanks again for being part of the company and cheers to some exciting times ahead!
Roger Mortimer | CEO & President
Amfil Technologies Inc..