MVEE filing, but I don't think I want to read it all....sounds like a bit of a mess to me.
1ST MIRACLE GROUP INC has filed a Form 8-K/A (Amended Current Report) with
the United States Securities and Exchange Commission.
Click on the following hyperlink to view this filing:
freeedgar.com
TYPE: 8-K/A OTHERDOC
SEQUENCE: 1
FILENAME: 0001.txt
DESCRIPTION: CHANGES IN REGISTRANT'S CERTIFIED ACCOUNTAN
OTHERDOC AVAILABLE Series=0001.txt Ver="": Document is copied.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A (No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) July 7, 2000
--------------------------------
1st MIRACLE GROUP, INC., n/k/a MIRACLE ENTERTAINMENT INC.
---------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Nevada
------
(State of other jurisdiction of incorporation)
0-27007 88-047481
--------------------------------- ----------------------------------
Commission File No. I.R.S. Employer Identification
8730 Sunset Boulevard, Penthouse East
West Hollywood, California 90069
-------------------------------------------- ---------------------------
Address of principal executive offices Zip Code
(310) 360-7490
--------------------------------
Registrant's telephone number,
including area code
ITEM 4. CHANGES IN REGISTRANT'S CERTIFIED ACCOUNTANT
1st Miracle Group, Inc. (a New York corporation), n/k/a Miracle
Entertainment, Inc. which acquired K-9 Protection Inc. (a Nevada corporation
n/k/a Miracle Entertainment, Inc.) (the "Registrant" or "Company") a
wholly-owned subsidiary of 1st Miracle Group Inc., a Canadian Corporation (the
"ultimate parent"), received on July 7, 2000 a letter dated June 29, 2000 from
its former accountant, Berg & Company LLP ("Berg"), in response to the
disclosure contained in the Company's report filed on Form 8-K/A on June 19,
2000. A copy of Berg's letter is annexed hereto as Exhibit 16.2
Berg had issued a qualified opinion to its independent accountants'
report on October 5, 1999 for the fiscal year ended April 30, 1999. The ultimate
parent disagreed with the qualification in the Berg report for the consolidated
financial statement and engaged Goldstein and Morris, Certified Public
Accountants, ("Goldstein and Morris") P.C. as a special consultant to review the
qualification contained in the Berg report. Goldstein and Morris advised that in
accordance with SAS No. 58(AU508), a qualified opinion should be rendered only
when there is a scope limitation, departure from generally accepted accounting
principles or a going concern issue. Additionally, the special consultant
further advised that a qualified opinion should not be issued when there is an
uncertainty or contingency not determinable as long as the uncertainty or
contingency was not due to a scope limitation. As a result of the foregoing, the
ultimate parent believes that the "Except for" qualification contained in the
Berg report for the fiscal year ended April 30, 1999 is not proper. Annexed
hereto as Exhibit 16.1, and previously included in the Company's 8-K
report, is a copy of the special consultant's report transmitted
to Berg by the Company.
For the first time, in the Berg letter of June 29th, Berg claims that
field work was insufficient to make a determination regarding compliance with
U.S. securities laws. Berg was provided full cooperation in connection with its
audit for the fiscal year ended April 30, 1999.
No claim or notification of a scope limitation was made by Berg until
the letter dated June 29, 2000. The ultimate parent and the Company disagree
with the claim by Berg that a scope limitation was imposed by management. The
Berg letter stated that the scope limitation resulted from "circumstances of the
engagement rather than restrictions imposed directly by ... management". No
limitation was imposed on the scope of the Berg audit nor at any time during
Berg's engagement did Berg provide written notice to the Board of Directors of a
scope limitation and that Berg would issue a qualified opinion.
Berg was retained to audit consolidated financial statements for the
specific purpose of filing the consolidated statements with the Ontario
Securities Commission as was required. The consolidated financial statements
were included in prior filings of the Company with the Securities and Exchange
Commission for informational purposes only and, as such, the consent of Berg was
not required prior to their inclusion in the filings.
No written notification was received from Berg during its engagement
concerning the need to expand internal controls, or that there was a deficiency
with respect to the controls; that there was a need to develop more reliable
financial statements; or that Berg was unable to rely upon management's
representation; or that the former accountant would be unwilling to be
associated with the financial statements prepared by management. The first and
only notification received concerning claimed deficiencies was the Berg letter
dated June 29, 2000.
EXHIBITS
16.1 Copy of Goldstein and Morris findings letter
dated May 4, 2000.
16.2 Copy of Berg & Company LLP letter dated June 29, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: West Hollywood, CA
July 12, 2000
MIRACLE ENTERTAINMENT, INC.
f/k/a 1st MIRACLE GROUP, INC.
-----------------------------
(Registrant)
-----------------------------
Clifford D. Brune
Chief Financial Officer
TYPE: EX-16.1 OTHERDOC
SEQUENCE: 2
FILENAME: 0002.txt
DESCRIPTION: COPY OF GOLDSTEIN & MORRIS FINDINGS LETTER 5/4/00
OTHERDOC AVAILABLE Series=0002.txt Ver="": Document is copied.
GOLDSTEIN AND MORRIS
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
36 WEST 44TH STREET
NEW YORK, NEW YORK 10036
May 4, 2000
Mr. Clifford Brune, CFO
1ST Miracle Group, Inc.
8730 Sunset Blvd.
Suite Penthouse East
West Hollywood, CA 90069
Dear Mr. Brune:
In accordance with our engagement letter as special independent certified public
accountants, we have reviewed the independent auditors' report which accompanied
the financial statements for the years ended April 30, 1999 and 1998 as audited
by Berg & Company LLP.
The auditors issued a qualified opinion because of a scope limitation. According
to our profession's authoritative literature, SAS No. 58 (AU 508), a qualified
opinion should be rendered when there is a scope limitation, a departure from a
generally accepted accounting principle or a going concern issue. A qualified
opinion should not be issued when there is an uncertainty or contingency not
determinable, as long as this wasn't due to a scope limitation.
The explanatory paragraph in the auditors' report is not a scope limitation and
the issuance of a qualified opinion was not appropriate. We have consulted on
this issue with Ms. Julia James of the AICPA Technical Department, Mr. Edward
Loftus, assistant chief accountant, of the United States Securities and Exchange
Commission and our SEC technical consultant Mr. Jeffrey Brimm, CPA. It was their
unanimous consensus that the explanatory paragraph in the auditors' report is
not a scope limitation and the issuance of a qualified opinion was not
appropriate.
If you have any questions or require any additional information do not hesitate
to contact me.
Very truly yours,
/s/ ALAN GOLDBERGER
-------------------
Alan Goldberger
TYPE: EX-16.2 OTHERDOC
SEQUENCE: 3
FILENAME: 0003.txt
DESCRIPTION: COPY OF BEG & CO., LLP LETTER 6/29/00
OTHERDOC AVAILABLE Series=0003.txt Ver="": Document is copied.
June 29, 2000
United States Securities and Exchange Commission
Division of Corporate Finance
450 5th Street, NW
Washington, D.C. 20549
Attention: Richard Wulff
Re: 1st Miracle Group, Inc., (formerly K-9 Protection, Inc.),
File No. 0-27007 Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure
This letter addresses our position regarding the disagreements with 1st Miracle
Group, Inc. management regarding accounting and financial disclosure.
1st Miracle Group, Inc. ("FMG" or "the Company") has filed Form 8-K-A on March
28, 2000, April 3, 2000, April 7, 2000, May 17, 2000 and June 19, 2000, and we
have the following comments regarding these filings with the US Securities and
Exchange Commission ("SEC"). We performed the audits of the financial statements
of 1st Miracle Group, Inc., a Canadian corporation, for the years ended April
30, 1999 and 1998. When we conducted the audits, FMG was not deemed to be a
reporting issuer pursuant to the Securities and Exchange Act of 1934 ("1934
Act"). We did not issue our audit reports on the financial statements for the
years ended April 30, 1999 and 1998 with the intention that they be included in
a publicly filed report to the SEC.
We issued a qualified opinion, an "Except for" on FMG's financial statements
for the fiscal year ended April 30, 1999. Our audit report was qualified for the
following reasons:
1. We were unable to collect sufficient competent evidential matter
regarding FMG's compliance with US and Canadian securities laws
with respect to the sale of its common stock (AU 508.40). The
Company's primary source of cash flows was through the sale of
securities, since it had discontinued its health club operations
and was in the process of developing its entertainment business.
We emphasized these transactions in an explanatory paragraph in
our audit report, and the opinion paragraph specifically referred
to the explanatory paragraph (AU 508.51.52).
To: United States Securities and Exchange Commission
Date: June 28, 2000
Page 2
Our professional standards, specifically the third standard of
fieldwork, require that the auditor's opinion be based on
sufficient competent evidential matter. If adequate evidence is
not collected, a scope limitation occurs, and accordingly the
auditor should express a qualified opinion or issue a disclaimer
of opinion on the financial statements. In this case, the scope
limitation resulted from circumstances of the engagement rather
than restrictions imposed directly by FMG management. During the
course of our audit we requested information regarding the sale of
securities. The information we collected as of October 4, 1999,
the last day of our fieldwork, was not deemed to be sufficient to
make a determination regarding the compliance with US and Canadian
securities laws. FMG management team informed us that they needed
to file audited financial statements for the fiscal year ended
April 30, 1999 with the Ontario Securities Commission by October
8, 1999. We informed Company's management that we did not have
sufficient evidential matter (e.g., an offering memorandum,
prospectus, or securities registration documents) regarding the
legality of these common stock sales (compliance with state,
provincial and federal securities laws of the US and Canada)
during the fiscal year ended April 30, 1999 and for the period
starting on May 1, 1999 to October 4, 1999.
We made inquiries with the Company's US and Canadian securities
counsel regarding these stock issuances. Specifically, we learned
in the course of our audit that management had issued shares of
its common stock to investors in the US and Canada, without state
or federal registration, without placing any restrictive legends
on the stock certificates and to our knowledge without sufficient
supporting documentation such as disclosure documents and
subscriber information. The Company could not site us to any
specific exemption upon which it relied. FMG management informed
us that securities counsel would need more time to make a proper
assessment regarding these stock sale transactions. In our
judgment these transactions were a significant uncertainty that
had direct affect on the financial statements, and sufficient
competent evidence was lacking to support the reasonableness of
FMG management's accounting estimates.
We encountered this scope limitation because adequate evidential
matter was not available to us as of October 4, 1999 with respect
to the uncertainty, but FMG management assured us that it would
become available to us in the future. In our judgment, FMG
management did not directly cause the scope limitation, thus, we
qualified our audit opinion rather than issuing a disclaiming
opinion. Management informed us that the Company would be working
with its securities counsel to resolve these regulatory issues in
Canada and the US, and that the Company was not in position to
appropriately address these matters with the Ontario Securities
To: United States Securities and Exchange Commission
Date: June 28, 2000
Page 3
Commission ("OSC") and the SEC as of October 4, 1999.
Additionally, we were informed that we would be provided evidence
regarding the resolution of these matters.
We informed client management, members of the Board of Directors,
and the Company's securities counsel regarding the type of
evidence needed for us to remove the qualification in our audit
report on the financial statements for the fiscal year ended April
30, 1999. As of May 11, 2000, the date we were dismissed as
independent certified public accountants, we were not provided
with adequate supporting documentation, which would result in us
removing the "except for" qualification from our report.
Since we were dismissed as the company's independent accountants,
we were and are unable to perform the necessary steps to modify
our audit report. We were also informed on May 11, 2000, that FMG
management disagrees with our accounting treatment, and it has
engaged new independent accountants to re-audit fiscal year ended
April 30, 1999.
2. On April 5, 2000, we were forwarded a letter from Richard Wulff,
chief of small business division of the SEC, to the Company, which
had accounting comments regarding FMG's financial statements. We
were unaware that our audit report on the financial statements for
the fiscal year ended April 30, 1999 would be included in any
filings with the SEC. We wrote a letter to FMG management and to
its Board of Directors informing them that we had not consented to
the use of our audit report on the financial statements for the
fiscal years ending April 30, 1999 and 1998 in any filings with
the SEC. We further informed management that the Form 8-K-A filed
on April 3, 2000 included our audit opinion but it was revised,
(i.e., the "except for" had been omitted), without our knowledge
or consent. We informed the Company that we did not modify our
audit opinion issued on October 4, 1999 on the financial
statements for the years ended April 30, 1999 and 1998, and
requested that management take appropriate actions to rectify
these errors. Additionally, we informed the Company that the
interim financial statements for the three months ending July 31,
1999, and the six months ending October 31, 1999, and the nine
months ending January 31, 2000 included in the Form 8-K-A filing
were not in conformity with generally accepted accounting
principles in regards to interim financial statements filed with
the SEC. The Company filed a Form 8-K-A on April 7, 2000, which
included our correct audit opinion.
3. On April 6, 2000 we informed FMG management and its Board of
Directors that reporting requirements under Regulation S-X and S-B
are more extensive than the GAAP reporting requirements, and that
the financial statements for the years
To: United States Securities and Exchange Commission
Date: June 28, 2000
Page 4
ended April 30, 1999 and 1998 were prepared in accordance with
disclosure requirements for a company not subject to the reporting
requirements under the 1934 Act. The Company's common stock was
traded on the NASDAQ: OTC Bulletin Board, but it was not a
reporting issuer.
We have the following comments regarding the Company's internal controls and in
regards to the expansion in the scope of the audit.
1. In August 1999, we informed FMG management that we had to expand
the scope of the audit based on results of our audits tests. The
scope of our audit was expanded primarily in the area of
transactions involving the sale of common stock.
2. We orally informed client management and its Board of Directors of
conditions that represented deficiencies in the design or
operation of the internal control, which could adversely affect
the Company's ability to record, process, summarize, and report
financial data consistently. We informed the Company's management
on several occasions that as the Company's operations increased,
the deficiencies in internal control design would have to be
addressed. FMG management and its Board of Directors informed us
that they would be addressing these internal control issues.
We are aware that the FMG has sold additional shares of its common stock
subsequent to the date of our audit report, October 4, 1999. As of May 11, 2000,
we have not received sufficient evidence regarding the sale of securities. The
sale of securities, subsequent to April 30, 1999, may not necessarily affect the
valuations at the balance sheet date, because these transactions may not be
directly associated with assets or liabilities that existed at the balance sheet
date.
We are unable to be associated with the financial statements of FMG due to the
scope limitation imposed by FMG management, and the disclosures made in the
financial statements of FMG for the years April 30, 1999 and 1998 will need to
be modified.
/S/ BERG & COMPANY, LLP
-----------------------
Berg & Company, LLP
cc: Tony Cataldo, 1st Miracle Group, Inc.
Cliff Brune, 1st Miracle Group, Inc.
V.T. Franzke, 1st Miracle Group, Inc.
Alan Goldberger, Goldstein and Morris, CPAs
Edward Loftus, SEC |
