SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
JANUARY 25, 1999
Date of Report (Date of Earliest Event Reported)
2-96366-A
(Commission File Number)
TREASURE & EXHIBITS INTERNATIONAL, INC.
Florida 59-2483405
(State of Other Juris- (IRS Employer Iden-
diction of Incorporation) tification Number)
2300 Glades Road, Suite 450-West
Boca Raton, Florida 33431
(Address of Principal Executive Offices)
(561) 750-7200
(Registrant's Telephone Number)
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Item 4. Changes in Registrant's Certifying Accountant
(a)(1)(i) On January 25, 1999, the Registrant terminated its
relationship with Thomas W. Klash, C.P.A. by dismissal. Mr. Klash
is a sole practitioner previously engaged as the principal
accountant to audit the Company's financial statements. The Company
had not entered into an engagement agreement with Mr. Klash for the
audit of its financial statements for the fiscal year ended
December 31,1998 at the time of dismissal.
(ii) Neither of the auditor's reports on the Company's
financial statements for the fiscal years ended December 31,1997
and December 31,1996 contained an adverse opinion or a disclaimer,
or was qualified or modified as to uncertainty, audit scope or
accounting principles.
(iii) The Company's decision to change accountants was
approved by the Registrant's Board of Directors on January 26,1999.
(iv) During the latter half of 1998, the interim period
preceding dismissal, there were increasing tensions over
disagreements with the former accountant regarding his on-going
stated need for certain documentation relating to various Company
transactions in connection with preparation for the audit for the
fiscal year ended December 31, 1998. The Company disagreed
generally with the stated need and was faced with substantial
difficulty and burdensome expense to secure the documents and to
satisfy the demands which went somewhat unresolved at December 31,
1998. Mr. Klash advised the Registrant that such needs if not
resolved to his satisfaction would cause reference to the subject
matter of the disagreements in connection with the auditor's report
for the fiscal year ended December 31,1998.
In addition to the disagreements regarding transactional
matters, the former accountant expressed concern with the Company's
non-payment of the former auditor's outstanding billing for work
undertaken on behalf of the Registrant to determine whether the
financial records of its former acquisition target, Michael's
Treasure Jewelry International, Inc., were in fact auditable.
During 1998, the former accountant concluded that they were not.
Based upon that determination, after months of intense effort, the
Registrant abandoned the planned acquisition as infeasible due to
the reported inability of audit of the target's books and records
of its operations.
By mid-January, 1999, the increasing strain between
management and the former accountant over what the Company viewed
as unreasonable and unnecessary document demands and excessive
pressure for payment of billing resulted in its decision to dismiss
Thomas W. Klash as the Company's auditor. The Company had come to
view its former accountant as too limited as a sole practitioner
and determined to seek and secure a larger firm to engage for the
audit of its financial statements for the fiscal year ended
December 31,1998.
(A) The Company had acquired a certain lot of treasure
artifacts from Seahawk Deep Ocean Technology during
the first quarter of 1998 and proposed to carriage
of the artifacts as substantial assets on its
balance sheet following completion of the purchase
transaction. During the balance of 1998, the former
accountant advised the Company that, at minimum,
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audit of its financial statements would necessitate
external valuation documentation such as detailed,
certified appraisals of all of the artifacts
comprising the purchased lot. The Company proposed
reliance upon various materials and statements of
the Seller in lieu of undertaking the burden of
seeking and paying for the evaluations required by
the former accountant. The former accountant
disagreed and pressed his viewpoint with increasing
frequency.
When the artifacts were sold near the end of the
fiscal year for debt of the new buyer, the former
accountant indicated a consequent need for
documentation and information demonstrating the
fiscal condition of the new buyer in order to agree
with the Registrant's proposal that the debt
resulting from the sale of the artifacts be carried
as an asset on the Company's balance sheet. Once
again, the Company disagreed with that stated need
and the requirement was unsatisfied at the time of
the dismissal.
The Company also disagreed with various other needs
stated by its former accountant. A gambling casino
sea-going vessel was acquired through lease-
purchase in the fourth quarter of 1998. The former
accountant again required valuation documentation
for the lease-purchase and suggested that the
Company secure a competent legal opinion regarding
the details of the proposed gambling operations.
The Company disagreed. The former accountant stated
a necessity to carry a certain put option
obligation arising from the artifacts purchase
transaction as a significant liability pursuant to
the purchase agreement. The Company viewed the puts
in question as extinguished. The former accountant
insisted that the Company secure waivers from the
put holders in the absence of which, the put
obligations of the Company would require a
corresponding, substantial liability on its 1998
statements. The Company disagreed.
The former accountant requested payment of his
outstanding billing with increasing frequency at
year end and prior to dismissal and proposed such
payment prior to engagement for the 1998 audit to,
among other things, preserve the former
accountant's independence in the engagement under
discussion. The Company did not tender payment to
its former accountant prior to dismissal and viewed
the former accountant's position in the matter as
undue pressure upon the Company.
(B) In the absence of an audit or similar committee of
the Board of Directors, the Company's sole director
frequently discussed the subject matter of each of
such disagreements with the former accountant.
(C) The Registrant has authorized the former accountant
to respond fully to inquiries of the successor
accountant concerning the subject matter of each
such disagreement, without limitation.
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(v) (A) During 1998, the former accountant generally
advised the Registrant that internal controls
necessary for the Company to develop reliable
financial statements were somewhat deficient. The
Registrant did not disagree and generally proceeded
with implementation of suggested needed
improvements.
(B) During 1998, the former accountant advised the
Registrant that the lack of reliable valuation
materials on the artifacts would cause the former
accountant to be unwilling to be associated with
the interim financials prepared by management.
(C) (1) The former accountant advised the Registrant
that further investigation of valuation of the
artifacts may have materially affected the
fairness or reliability of interim financial
statements issued by management since the last
audit.
(2) No such further investigation was undertaken
prior to dismissal.
(D) (1) The former accountant advised the Registrant
that the valuation situation and lack of
documentation of the re-sale buyer would
likely prevent an unqualified report on the
financial statements since the last audited
report.
(2) Those issues were not resolved prior to the
dismissal.
(2) On February 20, 1999, the Registrant engaged a new
independent accountant as the principal accountant to audit the
Company's financial statements, Rachlin, Cohen & Holtz, CPA,
located in Ft. Lauderdale, Florida.
Prior to engaging that accountant, neither the
Registrant, nor anyone on its behalf, consulted the newly engaged
accountant regarding either:
(i) the application of accounting principles to
specific transactions or the type of audit opinion
that might be rendered on the Registrant's
financial statements; or
(ii) any matter that was the subject of a disagreement
with the former accountant or any reportable event.
(3) The Registrant has requested the former accountant to
furnish the Registrant with a letter addressed to the Commission
stating whether the former accountant agrees with the statements
made by the Company in this Current Report on Form 8-K.
(b) Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
TREASURE & EXHIBITS INTERNATIONAL ,
INC.
Dated: March 5, 1999
BY:/s/Lee Summers
Lee Summers, CEO
