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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 dated August 24,
2007 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September 30, 2006 and December 31, 2006 and have withdrawn our completed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
Form 8-K/A filed by the Company on September 19, 2006 along with the letter of
M&K to the Commission dated August 24, 2007, which is attached thereto is
incorporated by reference herein.
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 a determination made
by management after consultation and review of the matter with the Audit
Committee that it was highly unlikely the anticipated financing from Manns
Haggerskjold of North America, Ltd. (“Manns”) would be funded, 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 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 each of these changes and all 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.