Item 4.01 Changes in Registrant's Certifying Accountant.
On June 11, 2020, the Audit Committee of the Board of Directors (the "Audit Committee") of Trans World Entertainment Corporation (the "Company") dismissed KPMG LLP ("KPMG"), which served as
the Company's independent registered public accounting firm, until completion of their audit of the Company’s consolidated financial statements as of and for the fiscal year ended February 1, 2020, and the issuance of their report thereon which
occurred on June 15, 2020.
During the two most recent fiscal years ended February 1, 2020 and February 2, 2019, and subsequent interim period through June 11, 2020, there have been no disagreements (as described in Item
304(a)(1)(iv) of Regulation S-K and the related instructions) with 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 to the subject matter of the disagreement in connection with its reports on the Company's financial statements for such periods.
During the two most recent fiscal years ended February 1, 2020 and February 2, 2019, and subsequent interim period through June 11, 2020, there were no "reportable events" as that term is
described in Item 304(a)(1)(v) of Regulation S-K.
The audit reports of KPMG on the Company’s consolidated financial statements as of and for the fiscal years ended February 1, 2020 and February 2, 2019, respectively, did not contain an
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’s report on the consolidated financial statements of the Company as of and for the fiscal years ended February 1, 2020 and February 2, 2019, contained an explanatory
paragraph stating that “the Company continues to experience recurring losses and negative cash flows from operations, 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 1. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.” KPMG’s report also contains an explanatory paragraph stating that “the Company has changed its method of accounting for leases as of February 3, 2019 due to the adoption of Accounting Standards Codification Topic
842, Leases.”
The Company has provided KPMG with a copy of this Form 8-K prior to its filing with the U.S. Securities and Exchange Commission (the “SEC”) and requested that KPMG furnish a letter addressed
to the SEC stating whether it agrees with the statements made by the Company herein and, if not, stating the respects in which it does not agree. A copy of KPMG's letter dated June 16, 2020, is filed as Exhibit 16.1 to this Form 8-K.
Also on June 11, 2020, the Audit Committee unanimously approved the appointment of FRUCI & ASSOCIATES II, PLLC ("Fruci") as the Company's new independent registered public accounting firm
to audit the Company's consolidated financial as of and for the year ending January 30, 2021. The decision to change the Company's independent registered public accounting firm was the result of a request for proposal process. The change will be
effective upon Fruci's completion of its standard client acceptance process and execution of an engagement letter.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements in this communication are forward-looking statements. The statements contained
herein that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.
We have used the words “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, and similar terms and phrases, including references to assumptions, in this document to identify forward-looking
statements. These forward-looking statements are made based on management’s expectations and beliefs concerning future events and are subject to uncertainties and factors that could cause actual results to differ materially from the results
expressed in the statements. The following factors are among those that may cause actual results to differ materially from the Company’s forward-looking statements: risk of disruption of current plans and operations of etailz and the potential
difficulties in customer, supplier and employee retention; the outcome of any legal proceedings that may be instituted against the Company; the Company’s level of debt and related restrictions and limitations, unexpected costs, charges, expenses,
or liabilities; the Company’s ability to operate as a going-concern; deteriorating economic conditions and macroeconomic factors; the impact of the COVID-19 pandemic; and other risks described in the Company’s filings with the SEC, such as its
Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.
The reader should keep in mind that any forward-looking statement made by us in this document, or elsewhere, pertains only as of the date on which we make it. New risks and uncertainties come up from time-to-time and it’s impossible for us to
predict these events or how they may affect us. In light of these risks and uncertainties, you should keep in mind that any forward-looking statements made in this document or elsewhere might not occur.