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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 15, 1997
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GRAPHIX ZONE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-28676 33-0697932
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2915 Daimler Street, Santa Ana, California 92705
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 833-3838
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(Former name or former address, if changed since last report)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
KPMG Peat Marwick LLP ("KPMG") was previously the principal accountants
for Graphix Zone, Inc. (the "Company"). On October 15, 1997 that firm's
appointment as principal accountants was terminated. The decision to change
accountants was made by the Company's Chief Executive Officer and ratified by
the Board of Directors of the Company.
In connection with the audits of the two fiscal years ended June 30,
1997, there were no disagreements with KPMG on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to their satisfaction would
have caused them to make reference in connection with their opinion to the
subject matter of the disagreement.
The audit reports of KPMG on the consolidated financial statements of
Graphix Zone, Inc. and subsidiaries as of and for the years ended June 30,
1997 and 1996 did not contain any adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles, except as stated in the following paragraph.
KPMG's auditors' report on the consolidated financial statements of
Graphix Zone, Inc. and subsidiaries as of and for the years ended June 30, 1997
and 1996, contained a separate paragraph stating that "the accompanying
consolidated financial statements and financial statement schedule have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 17 to the consolidated financial statements, the Company has
suffered recurring losses from operations, has a net capital deficiency and does
not have the necessary funds to pay its secured and unsecured debt obligations.
In addition, the Company has received two Notices of Default from its senior
secured lender and has taken steps to cease its principal business operations.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are also
described in note 17. The consolidated financial statements and financial
statement schedule do not include any adjustments that might result from the
outcome of this uncertainty."
A letter from KPMG Peat Marwick LLP is attached as Exhibit 16.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
16. Letter from KPMG Peat Marwick LLP re: change in accountants.
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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.
GRAPHIX ZONE, INC., a
Delaware corporation
Date: October 22, 1997 By: /s/ DAVID J. HIRSCHHORN
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David J. Hirschhorn,
Chairman of the Board, President,
Chief Executive Officer,
Chief Financial Officer
and Treasurer
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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16 Letter from KPMG Peat Marwick LLP re: change in accountants.
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EXHIBIT 16
[KPMG PEAT MARWICK LLP LETTERHEAD]
U.S. Securities & Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously principal accountants for Graphix Zone, Inc. and,
under the date of October 8, 1997, we reported on the consolidated financial
statements of Graphix Zone, Inc. and subsidiaries as of and for the years ended
June 30, 1997 and 1996. On October 15, 1997, our appointment as principal
accountants was terminated. We have read Graphix Zone, Inc.'s statements
included under Item 4 of its Form 8-K dated October 22, 1997 and we agree with
such statements, except that we are not in a position to agree or disagree with
Graphix Zone, Inc.'s statement that the decision to change accountants was made
by the Company's Chief Executive Officer and ratified by the Board of Directors
of the Company.
/s/ KPMG PEAT MARWICK LLP
October 22, 1997
