"PART II" OF 8K
On November 6, 1996, Registrant reached agreement with WPC to
re-engage WPC as Registrant's Independent Certifying Accountants to: 1)
complete its audit of the balance sheet of Registrant as of February 29, 1996
and the related statements of operations, stockholders' equity, and cash flows
for the year then ended, including the expanded scope of such audit as
indicated in WPC's letter to Registrant dated September 20, 1996; 2) render
consulting services and advice to Registrant, and in particular, advice
regarding Registrants periodic filings in 1996; and 3) audit Registrant's
balance sheet as of February 28, 1997, and the related statements of
operations, stockholders' equity, and cash flows for the year then ended.
As a result of the foregoing, on November 7, 1996, Registrant informed
Feldman Radin & Co., P.C. that Registrant had decided to re-engage its former
auditors to complete its accounting requirements. There was no disagreement
between Registrant and Feldman, Radin & Co., with respect to any accounting
issues. A copy of this Form 8- K will be provided to Feldman Radin & Co.
Nothing in connection with Registrant's re-engagement of WPC and termination of
a relationship, if any, with Feldman, Radin & Co., P.C., should be viewed as
casting any aspersions on Feldman, Radin & Co. P.C.
ITEM 5. Other Events
a. Forms S-8
On or about September 24, 1996, Registrant, as a result of
instructions from Mr. Huttoe, filed approximately 16 registration statements on
Forms S-8 with the SEC with respect to a total of approximately 39,577,538
shares of Registrant's common stock. Each
of the Forms S-8 caused to be filed with the SEC by Mr. Huttoe, reflected that
the shares of Registrant's common stock referred to in the respective Forms S-8
were issued to the recipient as compensation for services rendered to
Registrant. Registrant, as of the date of this report, does not have
sufficient information available to it to determine, among other things, the
exact nature or extent of the services, if any, rendered to Registrant by the
persons named in the aforementioned Forms S-8, whether those services, if any,
were actually rendered, or the value, fair market or otherwise, of the
services, if any, rendered to Registrant by the recipient of the shares named
in the Forms S-8 as the recipient. However, in certain cases, Registrant has
determined that certain shares of Registrant's common stock referred to in the
Forms S-8 were not issued for services rendered to Registrant, certain shares
were issued for cash payments to Registrant, and certain shares may have been
issued to nominees of Mr. Huttoe. Registrant's new management is conducting an
inquiry regarding, among other things, the facts surrounding the Forms S-8 and
Mr. Huttoe's actions with respect thereto. Registrant has also commenced
efforts to determine the property of the issuance of such shares and whether
any of the aforementioned shares or the value thereof, can be recovered by
Registrant.
b. Prior Periodic Reports.
On or about September 24, 1996, Registrant filed with the SEC,
Registrant's Form 10-KSB for the year ended February 29, 1996, and Registrant's
Form 10-QSB for the quarterly period ended May 31, 1996. Registrant lacks
confidence in the financial information and other disclosures in both of those
period reports and has retained the services of accountants (see Item 4
hereof), new counsel and others to investigate and determine the facts and
recommend remedial steps, if any, and if appropriate.
c. SEC Investigation
On or about October 4, 1996, the SEC issued a private formal order of
investigation concerning Registrant, the various filings made by it with the
SEC, trading in Registrant's securities, and the actions of Mr. Huttoe with
respect thereto. Registrant has and continues to voluntarily and actively
cooperated with the SEC in connection with its investigation.
d. SEC Ordered Suspension of Trading
On October 7, 1996, the SEC temporarily suspended trading in
Registrant's securities for a period of fourteen (14) days. In its press
release regarding the suspensions, the SEC stated:
"The Commission [SEC] ordered this trading suspension because
of questions raised as to the adequacy and accuracy of
publicly-disseminated information concerning, among other things: (1)
SOE's [Registrant] reported financial condition; (2) the existence and
value of services rendered to SOE in exchange for stock issued by SOE;
(3) whether stock was issued by SOE to consultants without
registration; (4) the reasons for changes in SOE's independent
accountants; and (5) SOE's
sales of its video teleconferencing products. The Commission
determined that the public interest and the protection of investors
requires a suspension of trading in SOE securities."
As noted in this Form 8-K, Registrant's current management has taken
various steps to investigate and resolve these issues.
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