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Item 4.02
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Non-Reliance
on Previously Issued Financial Statements or a related Audit Report
or
Completed Interim Review.
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As
previously announced in its Current Report on Form 8-K dated and filed on
August
13, 2007 (the “Form 8-K”), the Company dismissed Marcum & Kliegman, LLP
(“M&K”) as its independent registered public accounting firm. Thereafter, in
an amendment to the Form 8-K filed on September 19, 2007, the Company
filed a letter from M&K to the Securities and Exchange Commission responding
to the Form 8-K. In that letter, among other things, M&K stated it was “no
longer willing to be associated with the condensed consolidated financial
statements of the Company for the quarterly periods ended September 30, 2006
and
December 31, 2006 and have withdrawn our completed reviews relating to such
financial statements. Accordingly, those financial statements are effectively
filed without the review by the Company’s independent registered public
accountants as required by Article 10 of Regulation S-X.” As a result, the
condensed consolidated financial statements of the Company for the quarters
ended September 30, 2006 and December 31, 2006 in the Form 10-Q filed by
the
Company for each of those periods should no longer be relied upon.
The
Company is about to file an amendment to its quarterly report on Form 10-Q
for
the period ended September 30, 2006 (the “Form10-Q/A”), which was originally
filed on July 24, 2007. The financial statements therein have been reviewed
in
accordance with SAS #100 by Lazar Levine & Felix, LLP, the Company’s current
independent registered public accounting firm and the Company’s Audit
Committee.
In
the
Form 10-Q/A, there were no major changes made to the body or disclosures
in the
Report as a result of Lazar Levine & Felix’s review, except for an
amortization cost increase of $540,000 reflected throughout the financial
statements and applicable note disclosures as a result of not obtaining the
financing, Note 2 (Going Concern, Liquidity and Capital Resources and
Management’s Plans) where the Company updated balances through the date of the
filing and Extension dates and compliance filings and Note 20 (Subsequent
Events) to the financial statements regarding subsequent events that occurred
since July 24, 2007, in which the Company discloses (i) changes in officers,
(ii) additional loans under and refinancing of various loan and agreements
of
the Company (including financing agreements of All American Plazas, Inc.
(now
known as All American Properties, Inc.) (“AAP”) that were assumed by a newly
formed, wholly-owned subsidiary of the Company in the acquisition of assets
of
AAP which closed as of May 30, 2007), (iii) updates of litigation matters
(including the commencement of arbitration proceedings by the Company and
AAP
against Manns Haggerskjold of North America, Ltd. to recover fees paid to
Manns
to obtain financing for the Company and AAP, the settlement of an action
against
Summit Ventures, Inc., a second subpoena issued to the Company by the SEC
for
the production of documents and a summons and complaint served on the Company
and others which
inter
alia
seeks class action status filed by the shareholders of CCI Group
Inc.), (iv) entry into a consulting agreement with a related party, (v) the
dismissal of M&K as the Company’s independent registered public accounting
firm and the engagement of Lazar Levine & Felix as the Company’s new
independent registered public accounting firm, (vi) the law suit the Company
filed against M&K for breach of contract, gross negligence and defamation
and (vii) various other narrative changes throughout the Form
10-Q/A. The Company’s Audit Committee reviewed and discussed these
changes and the other disclosures contained in this Item 4.02 with the Company’s
current independent auditors.
The
Company anticipates that it will shortly file an amended quarterly report
on
Form 10-Q for the period ended December 31, 2006.