UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WAshington, D.C. 20549
FORM 8-K
CURRENT REPORT
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 24, 2000
FIRST AMERICAN HEALTH CONCEPTS, INC.
(Exact name of registrant as specified in its charter)
Arizona 0-15207 86-0418406
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File No.) Identification No.)
7776 South Pointe Parkway West, Suite 150, Phoenix, Arizona 85044-5424
(Address of principal executive offices) (Zip Code)
(602) 414-0300
(Registrant"s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On July 24, 2000, the Registrant was informed by its independent auditors,
KPMG LLP ("KPMG") of KPMG's resignation, effective that date.
The reports of KPMG on the financial statements of the Registrant for each
of the two fiscal years in the period ended July 31, 1999 did not contain any
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. However, the financial
statements for the year ended July 31, 1999 were restated with respect to an
unrecorded claims reserve of $261,000, a tax credit of $109,000 and adjustments
further reducing general expenses by $171,000. In addition, $146,000 of costs
were identified that do not qualify for deferral. All of these adjustments were
included in the financial statements of the Registrant for the fiscal quarter
ended April 30, 2000 ("3rd Quarter") and in amendments to the report on Form
10-KSB for the fiscal year ended July 31, 1999 ("FY 1999") and the reports on
Form 10-QSB for the fiscal quarters ended October 31, 1999 ("1st Quarter") and
January 31, 2000 ("2nd Quarter").
In the opinion of management of the Registrant, the financial statements
contained in the Registrant's report on Form 10-QSB for the 3rd Quarter
appropriately reflect all business transactions and all adjustments necessary
for a fair presentation of the financial position and the results of operations
of the Registrant for the periods presented.
After the 10-QSB for the 1st Quarter was filed, KPMG informed Registrant's
then chief executive officer ("CEO") and then chief financial officer ("CFO")
that the Registrant's financial statements for FY 1999 would need to be
adjusted. KPMG had recently completed a separate audit of the Registrant's
insurance company subsidiary and had identified certain items they determined
should be revised. Not having received a description of these adjustments by the
time the report on Form 10-QSB for the 2nd Quarter was due and believing that
any such adjustments would not be material to the income statements for the 2nd
Quarter, the CFO caused the Registrant to file the Form 10-QSB for the 2nd
Quarter in March.
On March 30, 2000, KPMG provided the Registrant with the proposed changes.
This information was reported to the Registrant's Executive and Audit Committees
on March 31, 2000. The Chairman and the current CEO agreed with KPMG that, if
there had been a material understatement of reserves for unrecorded claims
relating to the Registrant's insurance activity, these should be properly
restated. However, they questioned the need to reopen a number of other less
significant issues that had been passed in prior years.
From that point until the filing of the report on Form 10-QSB for the 3rd
Quarter, which was filed, after an extension, on June 20, 2000, the Registrant
and KPMG worked to determine the appropriate method of computing reserves for
unrecorded claims and the need to restate other items in the Registrant's
financial statements for FY 1999 and possibly in prior years.
The amendments to reports on Form 10-KSB for FY 1999 and on Form 10-QSB for
the 1st and 2nd Quarters were filed immediately prior to the report on Form
10-QSB for the 3rd Quarter. Shortly thereafter, KPMG notified the Registrant
that it was considering resigning as auditor but did not formally notify the
Registrant of its decision in that regard until July 24, 2000. In the meantime,
the Registrant has been interviewing other auditors but has not engaged a
successor at this time.
2
<PAGE>
The Registrant has authorized KPMG to respond fully to the inquiries of the
Registrant's successor accountant once one has been engaged and has requested
that KPMG provide the Registrant with a letter addressed to the SEC, as required
by Item 304(a)(3) of Regulation S-K, so that the Registrant can file such letter
with the SEC within ten business days after the filing of this report.
In connection with the audits of the two fiscal years ended July 31, 1999,
and the subsequent interim period through July 24, 2000, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to their satisfaction would have caused them to
make reference in connection with their opinion to the subject matter of the
disagreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information
None.
(c) Exhibits
16.1 Letter from KPMG dated July 31, 2000.
16.2 Letter re: change in Certifying Accountant
[to be filed by amendment]
3
<PAGE>
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, thereunto duly authorized, in the City of Phoenix, State of
Arizona, on July 31, 2000.
FIRST AMERICAN HEALTH CONCEPTS, INC.
By: /s/ James D. Hyman
---------------------------------
James D. Hyman, President
4
