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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 6, 1997
WASATCH PHARMACEUTICAL, INC.
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(Exact name of registrant as specified in its charter)
UTAH 2-35700 84-0854009
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(State or other jurisdiction (Commission File Number) (IRS Employer ID No.)
of incorporation)
714 East 7200 South, Midvale, Utah 84047
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(Address of principal executive office)
Registrant's telephone number, including area code: (801) 566-9688
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N/A
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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
On February 6, 1997, by mutual consent, the Registrant terminated its
relationship with its independent auditors by accepting the resignation of
Jones, Jensen & Company, Certified Public Accountants.
During the Registrants two most recent fiscal years and all interim
periods leading up to the date of Jones, Jensen & Company's resignation, they
did not issue any adverse opinions or disclaimer of opinion or qualify an
opinion as to uncertainty, audit scope, or accounting principles, except as to
the following:
1. A limitation in the scope of audit procedures performed with respect
to the Registrant's supplies inventory ($9,374) at December 31, 1995, due to
the fact that the auditors were not engaged in time to observe the opening
inventory; and
2. A modified opinion relating to the fact the Registrant is a
"development stage enterprise" and its ability to continue as a "going
concern".
Further, during the Registrant's two most recent fiscal years and all
interim periods leading up to the date of Jones, Jensen & Company's
resignation, the Registrant has had no disagreements with its former auditors
as to any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure except as to the following:
In preliminary discussions concerning the Registrant's audit for its
fiscal year ended December 31, 1996, the Registrant and its former auditors
reviewed the Registrant's Report on Recoverable Reserves the Registrant had
obtained relating to a 25% working interest in 50 oil and gas wells acquired
by the Registrant in exchange for shares of the Registrant's common stock.
Following such discussions a disagreement arose concerning the
Registrant's proposed valuation of the oil and gas properties. As a result,
the former auditors asked the Registrant to provide it with further geological
studies relating to the properties to substantiate the Registrant's proposed
valuation.
After consultation with other professionals knowledgeable in the oil and
gas industry, the Registrant's management concluded that the independent
geologist's report based upon volumetric determinations was an adequate
analysis of recoverable oil and gas and could be used as a basis for recording
the acquired asset to support Registrant's proposed valuation.
The Registrant discussed the former auditors request with the geologist
who prepared the reserve report and he indicated that an individual well by
well analysis would cost the Registrant at least $50,000 and take two to three
months to complete. Consequently, the Registrant engaged another reserve
expert to analyze and evaluate the oil and gas properties. The principal of
the expert retained, Clifford Budd, is a petroleum engineer and experienced in
reservoir analysis and reporting. Mr. Budd concluded that a determination
based upon volumetric methods to support the Registrant's proposed valuation
was appropriate for this group of wells for the following reasons:
1. The wells, although completed, are technically nonproducing proven
reserves, due to the major rework required; and
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2. According to the Society of Petroleum Engineers "Standards Pertaining
to the Estimating and Auditing of Oil and Gas Reserve Information", the
volumetric method and analogous reserve modeling are acceptable basis for
estimating recoverable reserves.
The Registrant's management and board of directors, after discussing the
delay that would occur and the additional costs related to obtaining a well by
well analysis as requested by its former auditors and after considering its
effect on the Registrant's impending programs to raise working capital,
concluded that it was in the best interest of the Registrant and its
shareholders to terminate its relationship with its former auditors and
commence a search for a successor independent accounting firm. The decision
to terminate the auditor's relationship was recommended and approved by the
Registrant's board of directors.
Gary V. Heesch, the C.E.O. and director of the Registrant discussed the
subject matter of the disagreement with the Registrant's former auditors and
the former auditors have been authorized to fully respond to inquires by
others concerning the subject disagreement.
The Registrant has requested that Jones, Jensen & Company review the
foregoing disclosures and provide a letter addressed to the Securities and
Exchange Commission stating whether they agree with the above statements and,
if not, stating in what respects they do not agree. Jones, Jensen &
Company's letter is included as an exhibit to this report on form 8-K.
On February 13, 1997, the Registrant, with the concurrence of its board
of directors engaged Thomas Leger & Co., L.L.P. as its principal independent
auditors.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND EXHIBITS
(b)(1) Pro Forma Financial Statements.
None.
(c)(1) Exhibits. The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
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16 16.01 Letter from Jones, Jensen & Company This filing
relating to termination as
Registrant's independent auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunder duly authorized.
WASATCH PHARMACEUTICAL, INC.
Date: February 27, 1997 /S/David Giles, Secretary
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[Jones, Jensen & Company Letterhead]
February 27, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Effective February 6, 1997, Jones, Jensen & Company ceased as auditors of
Wasatch Pharmaceutical, Inc. (the "Registrant"). We have read the
Registrant's revised disclosure under Item 4 on Form 8-K/A and concur with the
statements contained therein as they relate to our relationship with the
Registrant, our disagreement therewith, and our termination as auditors.
Sincerely,
/S/Jones, Jensen & Company
Certified Public Accountants
50 South Main Street, Suite 1450
Salt Lake City, Utah 84144
