BDO Seidman, LLP [LETTERHEAD]
330 Madison Avenue
New York, New York 10017
Telephone: (212) 885-8000
Fax: (212) 697-1299
July 21, 2000
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Dear Sir or Madam:
We have been furnished with a copy of the response to Item 4 of Form 8-K for the
event that occurred on June 30, 2000 filed by our former client, Digitec 2000,
Inc. We agree with the statements made in response to that Item insofar as they
relate to our Firm. However, we believe that the Commission should be advised
that:
1) The restatement of the 10Qs for the periods ended September 30, 1998,
December 31, 1998, and March 31, 1999 related to audit adjustments discovered
during the June 30, 1999 audit. These audit adjustments related to the fair
value of certain warrants issued in connection with the $1.2 million financing
during the quarter ended September 30, 1998 and their related amortization and
liabilities incurred for unrecorded and unfiled federal excise tax returns with
related interest and penalties.
2) The restatement of the June 30, 1998 10K was related to the classification of
excess minutes processed by Premiere Communications, Inc., a stockholder and
prior main supplier of the registrant, as cost of sales instead of advertising
creating a net gross loss and certain missing disclosures related to the
concentration of outstanding receivables.
3) BDO Seidman, LLP communicated to the management and audit committee of the
registrant during and after the fiscal 1999 and 1998 audits certain issues
related to the lack of management and material weaknesses in the Company's
internal controls. These issues included:
a. Inadequate closing procedures and a lack of personnel with expertise in
SEC regulations, tax laws, and a current understanding of recently issued
accounting pronouncements under generally accepted accounting principles
resulting in late and inaccurate filings of financial statements and tax
returns;
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b. Failure of the Company to file federal and state income tax returns and
excise tax returns and delinquent filings of payroll tax returns;
c. Lack of monthly and quarterly analysis related to estimations for
reserves, depreciation and amortization, and the impairment of certain customer
lists resulting in fourth quarter adjustments;
d. Lack of monthly and quarterly reconciliations between the subsidiary
and general ledgers; and
e. Lack of adequate general controls over accounting and information
systems including incomplete records at certain divisions and subsidiaries, an
inadequate review process by management, and a lack of segregation of duties
among employees in certain areas.
The audit committee and management informed BDO Seidman, LLP that these issues
were being addressed and represented deadlines for certain items to be
rectified. Senior management of the Company made representations that all
delinquent tax returns were expected to be filed by January 1, 2000, to the best
of our knowledge these returns have not yet been filed.
Very truly yours,
/s/ BDO Seidman, LLP
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BDO Seidman, LLP
