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) November 17, 2000
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SONUS CORP.
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(Exact name of registrant as specified in its charter)
Yukon Territory, Canada 1-13851 Not applicable
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
111 S.W. Fifth Street, Suite 1620, Portland, Oregon 97204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (503) 225-9152
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
By letter dated November 17, 2000, KPMG LLP confirmed to the Registrant
that the auditor-client relationship between the Registrant and KPMG LLP had
ceased.
KPMG LLP's report dated November 13, 2000, on the Registrant's
consolidated financial statements for the fiscal years ended July 31, 2000 and
1999, contained no adverse opinion or disclaimer of opinion, nor was any such
report qualified as to uncertainty, audit scope, or accounting principles.
During the fiscal years ended July 31, 2000 and 1999, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of KPMG LLP, would have
caused it to make reference to the subject matter of the disagreements in
connection with its report.
During a meeting of the Registrant's audit committee on November 16,
2000, KPMG LLP orally notified the members of the audit committee of certain
material weaknesses in certain of the Registrant's internal controls. KPMG LLP
stated to the audit committee that as of July 31, 2000, it believed that the
Registrant did not have specific policies and procedures in place to adequately
estimate the valuation adjustments required on its accounts receivable balances.
These adjustments include the allowance for bad debts, reserve for aged
receivables, and payment adjustments on product sales. In addition, KPMG LLP
informed the audit committee that it believed that the Registrant did not have
an adequate system to ensure proper recording of sales returns. On November 22,
2000, KPMG LLP delivered a letter dated November 13, 2000, to the Registrant
that further described these weaknesses and other reportable conditions and
recommended the following additional actions: (a) development of specific
accounting policies and procedures; (b) adding sufficient qualified accounting
personnel; (c) timely reconciliation of accounts; and (d) strengthening controls
surrounding accounting for sales and returned sales. The Registrant has
corrected, or is aggressively taking steps to correct, the matters identified by
KPMG LLP.
KPMG LLP also issued a letter dated March 29, 2000, in connection with
its review of the Registrant's financial statements for its quarter ended
January 31, 2000. This letter described two internal control weaknesses,
considered to be reportable conditions, and recommended timely reconciliation of
cash accounts and preparation of an accounts receivable aging report. In June
2000 at the conclusion of the review of the Registrant's financial statements
for its quarter ended April 30, 2000, KPMG LLP orally notified a member of the
Registrant's audit committee of the continued existence of the reportable
conditions noted in the letter dated March 29, 2000.
KPMG LLP also issued a letter dated October 25, 1999, in connection
with its audit of the Registrant's consolidated financial statements as of and
for the fiscal year ended July 31, 1999. This letter described certain internal
control weaknesses, considered to be reportable conditions, and recommended the
following actions: (a) timely reconciliation of cash accounts; (b) adding
sufficient qualified accounting personnel; (c) strengthening controls
surrounding accounting for sales; and (d) development of specific formal
accounting policies and procedures.
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The Registrant has authorized KPMG LLP to respond fully to any
inquiries of any successor accountant concerning the matters described above.
The board of directors of the Registrant has not yet selected a successor
accountant.
The Registrant has requested KPMG LLP to furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not it
agrees with the above statements, and if not, stating the respects in which it
does not agree. A copy of that letter dated November 27, 2000 is filed as
Exhibit 16 to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Exhibit 16 Letter of KPMG LLP re change in certifying accountant
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SIGNATURE
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 thereunto duly authorized.
DATED: November 27, 2000 SONUS CORP.
By
/s/ Paul C. Campbell
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Paul C. Campbell
Senior Vice President and
Chief Financial Officer
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