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, December 19, 2000. Date of earliest event reported, January 15,
1996
(Exact name of registrant as specified in it's charter)
LOCH HARRIS, INC.
Nevada 87-0418799
State of Incorporation IRS Employer Identification Number
515 Capital of Texas Highway, Suite 245 Austin, Texas 78746
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (512) 328-7808
INFORMATION TO BE INCLUDED IN THE REPORT
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Item 1. Changes in Control of Registrant.
None
Item 2. Acquisition or Disposition of Assets.
None
Item 3. Bankruptcy or Receivership.
Not applicable.
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Item 4. Changes in Registrant's Certifying Accountant.
Loch Harris, Inc.
Form 8-K 12-19-2000
Auditor Resignation
The Company's auditor, Brown, Graham & Company P.C.(Brown Graham), has advised
the Company by its letter dated December 8, 2000, that it was resigning
immediately and would no longer serve as independent auditors for the Company
and subsidiaries or provide future professional services and that its reports
dated March 8, 1999, March 27, 1999 and October 11, 1999 on the Company's
financial statements for the year ended December 31, 1996, six months ended June
30, 1997 and years ended June 30, 1998 and 1999 are withdrawn and should no
longer be relied upon. Brown Graham stated that its decision to resign and
withdraw its reports was the result of (1) Brown Graham's conclusion that it was
no longer able to rely upon management's representations and (2) the existence
of significant unresolved accounting matters relating to the Company's financial
statements as of and for the periods stated above. In recent previous
discussions, Brown Graham had expressed concerns to the Company that certain
matters had been brought to its attention by the Company's representatives
that could require that the financial statements for the periods stated above be
amended. Those matters included the following: (1) During the year ended
June 30,1999 and thereafter, the Company conducted an offering of its common
stock in reliance on Rule 504 of Regulation D under the Securities Act of 1933
and raised a total of $1,000,000 by issuing its unrestricted common stock to a
limited group. Although the Company relied on advice of counsel, it appears that
the exemption upon which the Company relied may not have been available. The
extent of the Company's liability , if any, and the persons to which it may be
liable, if any, cannot be determined at this time. Depending upon the
resolution of this matter, it could materially effect the disclosure and the
financial statements in the Form 10 KSB for the year ended June 30,1999 and
subsequent Forms 10 Q; (2) On several occasions during fiscal years 1998 and
1999 and the period subsequent thereto, the Company increased its authorized
shares of common stock and issued such stock in a manner which may not have
complied with statutory requirements. Depending upon the resolution of this
matter, such actions could materially effect the Forms 10 KSB for the years
ended June 30, 1998 and 1999 and subsequent Forms 10 Q; (3) The Company
purchased the assets of three entities subsequent to the fiscal year ended June
30,1999. The memoranda of understanding relating to the purchase of assets of
two of the companies indicated that the effective dates of the purchases would
be September 1, 1999 in one case and October 1, 1999 in the other case but both
acquisitions were subject to execution of final purchase agreements. The final
purchase agreements were not executed until 2000; however, one had an effective
purchase date that related back to the September 1, 1999 date and the other had
an effective purchase date that related back to October 1, 1999 date. Brown
Graham's report for the June 30, 1999 audit was not issued until October
11,1999. As a result, Brown Graham has indicated that it believed further
investigation was necessary to determine whether or not the disclosure regarding
the asset acquisitions should have been included in the financial statements in
the Form 10 KSB for the year ended June 30, 1999 because the effective dates of
such purchases were prior to the date of the Brown Graham audit report on
October 11,1999; (4) Due to questions that have arisen since the periods
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stated above, Brown Graham has requested that the Company engage an independent
appraiser to ascertain the valuation of the Company's restricted common stock
issued to persons, including affiliates, in exchange for services or products
during the periods stated above. A substantial number of shares of restricted
common stock were issued at various significant discounts from the then market
price. Until such appraisal is completed however, Brown Graham has indicated
that it is uncertain as to the impact, if any, on the previously issued
financial statements audited by Brown Graham; (5) Other matters addressed in
management letters issued to the Company which if not resolved could impair
internal controls to the point that the Company would not be able to develop
reliable financial statements. Such matters include but are not limited to
recommendations regarding documentation of meetings for the Company and its
subsidiaries; periodic internal financial statements for the Company and its
subsidiaries and creation and maintenance of books, records and bank accounts
regarding each as a separate entity; documenting expense reimbursements and
documenting and reporting to applicable authorities payments by way of cash or
issuance of stock for services; creation of an audit committee; and preparation
of budgets and projections on a regular basis.
The Company is reviewing the options and actions it needs to take in
connection with Brown Graham's actions and the issues which led to Brown
Graham's resignation.
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EXHIBIT TO FORM 8-K
AUDITOR COMMENT
BROWN, GRAHAM & COMPANY
PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Loch Harris, Inc.
We have read the statements that we understand Loch Harris, Inc. will include
under Item 4 of the Form 8-K report it will file regarding our resignation as
auditors. We agree with such statements made regarding our firm. We have no
basis to agree or disagree with other statements made under Item 4.
/s/ Brown, Graham & Company P.C.
Georgetown, Texas
December 18, 2000
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on it's behalf by the
undersigned hereunto duly authorized.
LOCH HARRIS, INC. Registrant
/s/ Rodney Boone /s/ Mark Baker
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Rodney Boone, President 12/ 19/2000 Mark Baker, CFO 12/19/2000
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