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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
AMENDED
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 8, 1998
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AUTOMOTIVE PERFORMANCE GROUP, INC
(Exact name of registrant as specified in its charter)
Delaware 0-23705 86-0850090
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1207 N. Miller Road, Tempe, Arizona 85281
(Address of principal executive offices) (Zip Code)
(602) 967-5990
Registrant's telephone number, including area code
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ITEM 4. CHANGES OR SUBSTITUTION OF ACCOUNTANTS
The independent certified public accountants for IMSG is Grant Thornton LLP
("Grant Thornton"). IMSG was the accounting acquirer in the transaction
described in Item 2(a). Arthur Andersen LLP ("Arthur Andersen") was the
independent certified public accountant for Klein Engines and Competition
Components, Inc. ("Klein Engines") prior to the transaction described in Item
2(a). The Board of Directors of Automotive Performance Group, Inc. intends for
Grant Thorton LLP to continue as the independent certified public accountants
for the registrant and its subsidiaries.
1. Arthur Andersen did not resign or decline to stand for re-election; it was
replaced by Grant Thornton effective April 17, 1998.
2. Arthur Andersen's report on Klein Engines's financial statements for the
fiscal year ended December 31, 1997, contained a qualified opinion, which
included the following language:
The accompanying financial statements have been prepared assuming that
Klein Engines will continue as a going concern. As discussed in Note 1
to the financial statements, Klein Engines incurred a significant
operating loss in fiscal 1997, has a credit facility outstanding that
is due on demand after January 31, 1998, and projects insufficient cash
flow from operations to meet its debt service requirements, all of
which raise substantial doubt about Klein Engines's ability to continue
as a going concern. Management's plan in regard to these matters also
are described in Note 1. The financial statements do not include any
adjustments relating to the recoverability and classification of asset
carrying amounts or the amount and classification of liabilities that
might result should Klein Engines be unable to continue as a going
concern.
3. The decision to continue with Grant Thornton was made by the full Board of
Directors of the registrant.
4. During the term of Arthur Andersen's engagement, there were no
disagreements between Klein Engines and Arthur Andersen on any matter of
accounting principle or practice, financial statement disclosure, or
auditing scope or procedure which disagreements, if not resolved to the
satisfaction of Arthur Andersen, would have caused it to make a reference
to the subject matter of the disagreement in connection with its report,
except the following:
(a) Arthur Andersen reported to Klein Engines that, in the course of their
review of the financial statements for the year ended December 31, 1997,
they identified a material weakness in Klein Engines's internal controls.
These conditions consist of (i) inadequate policies and procedures with
respect to corporate governance, including absence of an Audit Committee of
the Board of Directors, and (ii) weaknesses in Klein Engines's financial
reporting infrastructure, including lack of personnel with the requisite
accounting-related skills and inadequate accounting-related processes and
systems.
5. Grant Thornton LLP became the new accountants for APG effective upon the
merger, April 17, 1998 by succession. APG had no prior involvement with
Grant Thorton.
6. Klein Engines authorized Arthur Andersen to respond fully to the inquiries
of the successor accountants as to the above.
APG requested Arthur Andersen to furnish it with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statements. A copy of that letter, dated September 4, 1998, is filed as
exhibit 1 to this Form 8-K Amendment
As Exhibit hereto is the following
EXHIBIT 1: LETTER OF ARTHUR ANDERSEN, LLP
Signed this 9th day of September, 1998 by:
Joe Marenda,
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Joe Marenda, Vice President
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[ARTHUR ANDERSEN LETTERHEAD]
September 4, 1998
Securities and Exchange Commission
Mail Stop 9-5
450 Fifth Street, N.W.
Washington, D.C. 20549
We have read Item 4 included in the attached Form 8-K dated April 8, 1998 of
Automotive Performance Group, Inc. to be filed with the Securities and Exchange
Commission and are in agreement with the statements contained therein.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
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