SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
AMENDMENT 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): March 21, 1995
Cayman Resources Corporation
(Exact name of registrant as specified in its charter)
Oklahoma 0-13337 73-1129531
(State of (Commission File No.) I.R.S.Employer
Incorporation) Identification No.)
601 South Boulder, Ste 500, Tulsa, Oklahoma
74119-1323
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 918-587-4470
Not Applicable
(Former name or former address, if changed since last report.)
Page 1 of 10 consecutively numbered pages.
Item 4. Changes in Registrant's Certifying Accountant.
1. On March 21, 1995, the Registrant dismissed its auditors, Arthur
Andersen and Co. S.C. (AA) although AA was previously considering to
decline to stand for re-election. AA's report on the Registrant's
financial statements during the two most recent fiscal years reported upon
did contain a disclaimer of opinion. This disclaimer was initially filed
with the Securities and Exchange Commission on Form 10-KSB on September 2,
1994, and again filed with the Securities and Exchange Commission on Form
8-K on November 4, 1994. A copy of AA's disclaimer opinion is attached
hereto as Exhibit 1.
Furthermore, during the last two fiscal years and the subsequent
interim period to the date hereof, there were no disagreements between the
Registrant and AA on any matters of accounting principles or practices,
financial statements disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of AA, would have
caused it to make a reference to the subject matter of the disagreements
in connection with its reports. No consultations were held with AA during
any interim periods subsequent to AA report.
Furthermore, none of the "reportable events" described in Item
304(a)(1)(ii) of Regulation S-K occurred with respect to the Registrant
within the last two fiscal years and the subsequent interim period to the
date hereof.
2. Effective March 21, 1995, the registrant engaged Hammert, Bolka &
Mikysa (HB&M) as its principal accountants. HB&M and the Registrant have
agreed that HB&M is to perform an audit of the Registrant's financial
statements for the period ending December 31, 1994. This change in
auditors was agreed to after careful consideration by the Registrant's
management and Board of Directors. During the last two fiscal years and
the subsequent interim period to the date hereof, the Registrant did not
consult HB&M regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.
Item 7. Financial Statements and Exhibits.
1. Disclaimer Opinion Letter from Arthur Andersen & Co., S.C. dated
August 30, 1994, and filed September 2, 1994 with the Securities and
Exchange Commission as incorporated in the Registrant's annual
report of Form 10-KSB for the year ending December 31, 1993.
2. Notification letter from Arthur Andersen & Co., S.C. dated March 20,
1995.
3. Letter Agreement between Cayman Resources Corporation and Hammert,
Bolka & Mikysa dated March 16, 1995, and executed by the registrant
on March 21, 1995.
4. Confirmation Letter to the SEC from Arthur Andersen & Co., S.C.
Page 2 of 10 consecutively numbered pages
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed in its behalf by
the undersigned hereunto duly authorized.
Cayman Resources Corporation
DATED: May 22, 1995 By:
David M. Whitney, President and
Chief Executive Officer
Page 3 of 10 consecutively numbered pages.
INDEX TO EXHIBITS
SEC
Exhibit No. Description of Exhibits Page
1 Disclaimer Opinion Letter
of Arthur Andersen & Co., S.C. 5
2 Decline letter
from Arthur Andersen & Co., S.C. 8
3 Letter Agreement between
Cayman Resources Corporation
and Hammert, Bolka & Mikysa 9
4 Confirmation Letter from Arthur Andersen 10
& Co., S.C. re: Change in Auditors
Dated May 23, 1995
Page 4 of 10 consecutively numbered pages.
EXHIBIT 1 TO FORM 8-K
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Cayman Resources Corporation:
We have audited the accompanying consolidated balance sheet of Cayman
Resources Corporation (an Oklahoma corporation) and subsidiaries as of
December 31, 1993, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the two years in the
period ended December 31, 1993. These financial statements and the
schedules referred to below are the responsibility of the Company's
management. Our responsibility is to report on these financial statements
and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our report.
As discussed in Note 1 to the Consolidated Financial Statements, the
Company has historically incurred net losses from operations and had a
working capital deficit of $2,826,130 as of December 31, 1993. The
Company began refinery operations in early 1994 after extensive renovation
and clean up expenditures. To successfully operate the refinery in the
future will require a substantial amount of funds, which the Company will
likely be required to obtain from external financing sources. At this
time, the Company does not have such financing available and it is not
possible to determine whether such funds can be obtained by the Company.
Additionally, the Company has no control over the margins between the cost
of the products produced and the price it will receive for refined
products, which are determined by the market place. Without adequate
demand for the solvents and products produced by the refinery, the Company
will not be able to conduct successful refinery operations. Management's
plan in regard to these matters is described in Note 1. It is not
possible to predict the ultimate outcome of these matters. The
consolidated financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
Because of the significance of the matters discussed in the preceding
paragraph, we are unable to express, and we do not express, an opinion on
the consolidated financial statements referred to above.
Our audits were made for the purpose of reporting on the basic
consolidated financial statements taken as a whole. The schedules listed
in the index to the consolidated financial statements are presented for
purposes of complying with the Securities and Exchange Commission's rules
and are not part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the
audits of the basic consolidated financial statements. Because of the
significance of the matters discussed in the second preceding paragraph,
we are unable to express, and we do not express, an opinion on these
schedules.
/s/
ARTHUR ANDERSEN & CO.
Oklahoma City, Oklahoma
August 30, 1994
Page 5 of 10 consecutively numbered pages.
EXHIBIT 2 TO FORM 8-K
ARTHUR ANDERSEN & CO., S.C.
Suite 1200
20 Broadway
Oklahoma City, OK 73102-8286
(405) 236-1491
March 20, 1995
Mr. David Whitney
President
Cayman Resources Corporation
Petroleum Building, Ste 500
Tulsa, Oklahoma 74119
Dear Mr. Whitney:
This is to confirm that the client-auditor relationship between Cayman
Resources Corporation (Commission File Number 0-13337) and Arthur Andersen
LLP has ceased.
Very truly yours,
/s/
ARTHUR ANDERSEN LLP
Copy to: Chief Accountant
Securities and Exchange Commission
Page 6 of 10 consecutively numbered pages.
EXHIBIT 3 TO FORM 8-K
HAMMERT BOLKA & MIKYSA
3030 NW Expressway, Suite 502
Oklahoma City, OK 73112
(405) 948-7284
Fax (405) 948-7324
March 16, 1995
Mr. David M. Whitney, President
Cayman Resources Corporation
601 South Boulder, Ste 500
Tulsa, Oklahoma 74119-1323
Dear Mr. Whitney:
In accordance with our conversation today, we are pleased to confirm our
understanding of the services we are to provide for Cayman Resources
Corporation (Company) for the year ended December 31, 1994.
We will audit the balance sheet of the Company as of December 31, 1994,
and the related statements of income, retained earnings, and cash flows
for year then ended as well as the required schedules to be included in
the Form 10K filing with the SEC.
Our audit will be conducted in accordance with generally accepted auditing
standards and will include tests of your accounting records and other
procedures we consider necessary to enable us to express an opinion
regarding your financial statements and related schedules. Our work
probably will determine that we will be unable to render an opinion as to
the fairness of the financial position of the Company because of
uncertainties relating to operating losses of the Company and its ability
to operate its refinery of a profitable basis in the future. We will not
issue a report as a result of this engagement unless we have an agreement
of all parties involved when our work is completed.
Our procedures will include tests of documentary evidence supporting the
transactions recorded in the accounts, tests of the physical existence of
inventories, and direct confirmation of cash and note holders by
correspondence with selected creditors and banks. We will request written
representations from your attorney as part of the engagement, and they may
bill you for responding to this inquiry. At the conclusion of our audit,
we will also request certain written representations from you about the
financial statements and related matters.
Page 7 of 10 consecutively numbered pages.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements; therefore, our audit
will involve judgment about the number of transactions to be examined and
the areas to be tested. Also, we will plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. However, because of the concept of
reasonable assurance and because we will not perform a detailed
examination of all transactions, there is a risk that material errors,
irregularities, or illegal acts, including fraud or defalcations, may
exist and not be detected by us. We will advise you, however, of any
matters of that nature that come to our attention. Our responsibility as
auditors is limited to the period covered by our audit and does not extend
to any later periods for which we are not engaged as auditors.
We understand that you will provide us with the basic information required
for our audit and that you are responsible for the accuracy and
completeness of that information. Arthur Andersen & Co., the former
Company auditors, will be contacted and requested to allow us to examine
their audit work-papers for prior years' work performed by them. We will
advise you about appropriate accounting principles and their application
and will assist in the preparation of your financial statements, but the
responsibility for the financial statements remains with you. This
responsibility includes the maintenance of adequate records and a related
internal control structure, the selection and application of accounting
principles, and the safeguarding of assets.
Our audit is not specifically designed and cannot be relied on to disclose
reportable conditions, that is, significant deficiencies in the design or
operation of the internal control structure. However, during the audit,
if we become aware of such reportable conditions or ways that we believe
management practices can be improved, we will communicate them to you in
a separate letter.
Our fees for these services will be based on the actual time spent at our
hourly rates discussed with you today of $90 for partners, $60 for in-
charge field personnel and $50 for assistants, plus travel and other out-
of-pocket costs. As we discussed today, we request a beginning fee
advance of $4,000 and when our charges reach this advance, we will bill
additional charges as our work progresses and request prompt payment when
billings are made.
We appreciate the opportunity to be of service to you and believe this
letter accurately summarizes the significant terms of our engagement. If
you have any questions, please let us know. If you agree with the terms
of our engagement as described in this letter, please sign
Page 8 of 10 consecutively numbered pages.
the enclosed copy and return to us, and this letter will continue in
effect until canceled by either party.
Very truly yours,
HAMMERT BOLKA & MIKYSA
By: /s/
Ed Bolka
This letter correctly sets forth the understanding of Cayman Resources
Corporation.
By: /s/ 3-21-95
David M. Whitney, President Date
Page 9 of 10 consecutively numbered pages.
EXHIBIT 4 TO FORM 8-K
ARTHUR ANDERSEN & CO., S.C.
Suite 1200
20 Broadway
Oklahoma City, OK 73102-8286
(405) 236-1491
Securities and Exchange Commission
Office of the Chief Accountant
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
We have read Item 4 included in amendment 2 to Form 8-K dated May 22, 1995
of Cayman Resources Corporation to be filed with the Securities and
Exchange Commission and are in agreement with the statements contained
therein as they relate to our firm.
Very truly yours,
/s/
By
Robert O. Lorenz
AK
Page 10 of 10 consecutively numbered pages
