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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): OCTOBER 30, 1998
(OCTOBER 23, 1998)
RASTER GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
0-20933
(Commission File Number)
DELAWARE 94-3046090
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
3025 ORCHARD PARKWAY
SAN JOSE, CA 95134
(Address of principal executive offices, with zip code)
(408) 232-4000
(Registrant's telephone number, including area code)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On October 23, 1998, the Company received a letter from Ernst & Young LLP
("E&Y") informing the Company that the client-auditor relationship between the
Company and E&Y had ceased. E&Y has declined to stand for re-election as the
Company's auditors. The Company has authorized E&Y to respond fully to the
inquiries of the Company's successor auditor.
E&Y's reports with respect to the Company's financial statements for each
of the two fiscal years ended December 31, 1996 and 1997 did not contain an
adverse opinion or a disclaimer of opinion and were not qualified as to
uncertainty, audit scope or accounting principles. E&Y's report with respect to
the Company's financial statements for fiscal year ended December 31, 1997 was
modified to include an explanatory paragraph stating that there is substantial
doubt about the Company's ability to continue as a going concern. The financial
statements did not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.
In connection with the audits of the Company's financial statements for
each of the two fiscal years ended December 31, 1996 and 1997 and in the
subsequent interim period preceeding the cessation of the client-auditor
relationship between the Company and E&Y, there were no disagreements with E&Y
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope and procedures which, if not resolved to the
satisfaction of E&Y would have caused E&Y to make reference to the matter in
connection with their report.
During the Company's fiscal years ended December 31, 1996 and 1997, and in
the subsequent interim period preceeding the cessation of the client-auditor
relationship between the Company and E&Y, the following reportable events
occurred:
On February 2, 1998, E&Y informed the Audit Committee of the Company's
Board of Directors that in connection with the audit of the Company's fiscal
year 1997 consolidated financial statements, the lack of appropriate resources,
the lack of control over the recording of revenue, an unreliable accounting
system, and a lapse in controls over the Company's subsidiaries, resulted in
delays in closing the books and difficulty in accumulating accurate information
necessary for financial statement disclosure in a timely manner. E&Y considered
this condition to be a material weakness. As a result of this material weakness
and at various times during the performance of their audit, E&Y advised the
Company of the need to significantly expand the scope of their audit.
Further, at various times during the performance of their audit and as
documented in their letter to the Audit Committee dated September 25, 1998, E&Y
informed the Company and Audit Committee of various conditions that it
considered to be errors and irregularities. These errors and irregularities
took numerous forms and were primarily the result of a lack of compliance with
the Company's procedures and controls. In addition, E&Y stated that over time a
number of factors contributed to an environment that allowed the circumvention
of established procedures and controls. E&Y considered that collectively these
conditions represented a material weakness.
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The Company has requested that E&Y furnish a letter addressed to the
Commission stating whether E&Y agrees with the above statements. A copy of that
letter, when received by the Company, will be promptly filed with the Commission
as Exhibit 16.1 to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
*Exhibit 16.1 Letter from Ernst & Young LLP
*To be filed by amendment when such letter is received by the Company.
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SIGNATURES
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 hereunto duly authorized.
RASTER GRAPHICS, INC.
Date: October 30, 1998 By: /s/ Rak Kumar
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RAKESH KUMAR
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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