No red flags went up when they stated they needed to do PSD mockups first? Correct me if I'm wrong, but you just wanted a theme change, had the theme picked out, then for some reason agreed to allow them to do PSD mockups for a new site for you? WTF?
Hate to say it, but I was going to post pretty much the same thing. Why PSD mockups?! That doesn't make any fucking sense for what you're asking to have done.