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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date earliest event reported) July 3, 1996
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VALUE HOLDINGS, INC.
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(exact name of registrant as specified in its charter)
FLORIDA
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(State or other jurisdiction of incorporation)
0-15076 59-2388734
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(Commission File Number) (IRS Employer Identification Number)
3211 PONCE DE LEON BLVD., CORAL GABLES, FL 33134
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (305) 666-3165
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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 July 3, 1996, at approximately 5:10 pm, Value Holdings,
Inc. (the "Company") received a letter from its auditors, Rachlin, Cohen &
Holtz, that they had resigned the Company's account. The letter stated that the
reason for the resignation was that the Company had provided incomplete
information and that the information supplied was generally inconsistent with
management's assertions. In addition, the former auditors stated that they had
a "serious concern with regard to the control environment existing at the
Company. Circumstances have demonstrated significant override of the basic
features of internal control and, thus, significantly undermine the credibility
of the Company's financial reporting process." A copy of the letter is attached
as Exhibit 1.
The Company does not agree with the assertions of the former
auditors and it is at a loss to understand the reason for the resignation. To
the best of management's knowledge, all of the information requested by the
auditors for the completion of the audit had been provided and there had been
no indication that there were any unresolved discrepancies. Rachlin, Cohen &
Holtz were the Company's auditors for the past two years and Morris Hollander,
the account partner for Rachlin, Cohen & Holtz, was the Company's auditor for
the three preceding years and neither of them have previously expressed
concerns over the Company's financial and accounting controls.
On July 6, 1996, the Company retained the firm of Chadderton,
Gulisano & Company, P.A. as the Company's new auditors. There had been no
discussions of the type referred to in Item 304(a)(2) of Regulation SK between
the Company and the new auditors prior to their engagement. A copy of the
engagement letter between the Company and Chadderton, Gulisano & Company is
attached as Exhibit 2.
Item 7. Financial Statements and Exhibits.
Exhibit 1. Letter from Rachlin, Cohen & Holtz to the Company
dated July 3, 1996.
Exhibit 2. Letter from Chadderton, Gulisano & Company, P.A. to
the Company dated July 6, 1996.
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.
VALUE HOLDINGS, INC,
By /s/ Anthony Pallante
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Anthony Pallante
President
Date: July 11, 1996
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EXHIBIT 1
[RACHLIN COHEN & HOLTZ LETTERHEAD]
July 3, 1996
VIA FACSIMILE AND
CERTIFIED MAIL,
RETURN RECEIPT REQUESTED
Members, Board of Directors
Value Holdings, Inc.
3211 Ponce de Leon Boulevard
Suite 210
Coral Gables, Florida 33134
Dear Sirs:
Please be informed that effective immediately we resign as
independent certified accountants for Value Holdings, Inc.
As we have discussed, many questions and concerns have arisen in
connection with our audit of the Company for the fiscal year ended February 29,
1996. Because of these questions and concerns, we found it necessary to
perform and have performed expanded audit procedures.
In connection with such procedures and our general audit procedures,
we have attempted to obtain accurate, complete, reliable documentation.
However, we have continually been provided with incomplete information, which
is generally inconsistent with management's assertions. The limited
documentation provided has continued to raise new questions and concerns.
Management's inability to provide requested source documentation has severely
eroded our ability to rely on management's representations.
Not only is the quality of the documents we received insufficient,
but the explanations for many transactions are equally insufficient. For
example, there are material transactions with related
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Members, Board of Directors
Value Holdings, Inc.
July 3, 1996
Page Two
parties at year end that have a material effect on reported earnings and
stockholders' equity, which have neither sufficient documentation nor
explanation.
Moreover, the findings during our expanded procedures have given us
serious concern with regard to the control environment existing at the Company.
Circumstances have demonstrated significant override of the basic features of
internal accounting control and, thus, significantly undermine the credibility
of the Company's financial reporting process.
In short, we have been precluded by the Company from obtaining
sufficient competent evidential matter for audit purposes. Under the
circumstances, we have substantial doubt about a number of assertions of
material significance to the Company's financial statements.
We suggest that you consult with your legal counsel to determine what
filings or other forms of disclosure are necessary in connection with our
resignation.
/s/ RACHLIN COHEN & HOLTZ
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RACHLIN COHEN & HOLTZ
cc: Robert Ruben, Esq.
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EXHIBIT 2
[CHADDERTON, GULISANO & COMPANY, P.A. LETTERHEAD]
July 6, 1996
Ms. Alison Cohen
Vice-President
Value Holdings, Inc.
3211 Ponce De Leon Boulevard - Suite 210
Coral Gables, Florida 33134
HAND DELIVERED
Dear Ms. Cohen:
This will confirm our understanding of the arrangements made with you covering
the audit you wish us to make of the consolidated financial statements of Value
Holdings, Inc. (Value) for the twelve months ended February 29, 1996.
Our work is to consist of an audit, to be performed in accordance with
generally accepted auditing standards, of the balance sheet at February 29,
1996 and the related statements of income, retained earnings and cash flows for
the twelve months then ended. Upon completion of our audit, we will provide
you our report covering those financial statements.
As part of our audit, we will consider solely for the purpose of determining
the nature, timing and extent of our audit procedures, CAM's internal control
structure elements (i.e., the control environment, accounting system and
control techniques). This consideration will not entail a detailed study and
evaluation of any of these elements for the purpose of providing assurances
thereon. However, any significant matters relating to the internal control
structure noted during our audit will be communicated to you along with our
comments and suggestions on these and other business matters.
An effective internal control structure reduces the likelihood that errors or
irregularities will occur and remain undetected; however, it does not eliminate
that possibility. Accordingly, while we cannot guarantee that errors or
irregularities, if present, will be detected, we will design our audit to
provide reasonable assurance of detecting errors of irregularities that would
be material to the financial statements.
Management is responsible for the proper recording of transactions in the books
of accounts, for the safeguarding of assets, and for the substantial accuracy
of the financial records. You have the final responsibility for the income tax
returns and, therefore, you should review them carefully before you sign and
file them.
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Ms. Alison Cohen
Vice-President
July 6, 1996
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Charges for our work will be based upon the time required to complete the
assignment, plus out-of-pocket expenses. We currently estimate our fee will
not exceed $25,000. A $12,500 retainer is due upon signing of this engagement
letter. The balance to be paid 50% at completion and issuance of the financial
statements and any remaining balance 30 days thereafter. In addition, travel
costs and any other material out of pocket expenses if any, will be borne by
Value. We will, of course, endeavor to keep our charges as low as possible.
Our invoices are due and payable upon presentation.
We attempt at all times to render quality service for a fair fee. If at any
time you have a question concerning our service or fees, please call it to our
attention so that we can discuss it. Our goal is to handle fees on a equitable
basis, and in an open manner which will result in our mutual agreement.
You have stated that time is of the essence for the issuance of the financial
statements. Being that it is our intention to provide you with the audited
financial statements as soon as possible, this arrangement requires the
utilization of the predecessor auditor's audit files and substantial support
from your personnel.
If the foregoing fairly sets forth your understanding, please sign the enclosed
copy of this letter in the space indicated and return it to our office. An
envelope is enclosed for your convenience.
We appreciate this opportunity to be of service.
Very truly yours,
CHADDERTON, GULISANO & COMPANY, P.A.
Certified Public Accountants
/s/ GEORGE A. GULISANO, C.P.A.
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George A. Gulisano, C.P.A.
Accepted By: /s/ ALISON COHEN
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Alison Cohen
Date: 7/6/96
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