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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 of earliest event reported): February 3, 1999
INTEGRATED ORTHOPAEDICS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Texas 76-0203483
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5858 Westheimer, Suite 500, Houston, Texas 77057
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(Address of principal executive offices)
(713) 225-5464
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(Registrant's telephone number, including area code)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) By unanimous written consent on February 3, 1999, the Board of Directors of
Integrated Orthopaedics, Inc. ("IOI") dismissed the firm of
PricewaterhouseCoopers LLP as IOI's principal accountant and engaged the
accounting firm of Ernst & Young LLP as principal accountant to audit IOI's
financial statements for the year ended December 31, 1998.
(b) During the two most recent fiscal years ended December 31, 1997 and the
subsequent interim period preceding the dismissal, there have been no
disagreements with PricewaterhouseCoopers LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedure, which disagreements if not resolved to the satisfaction of
PricewaterhouseCoopers LLP would have caused them to make reference
thereto in their report on the financial statements for such years.
(c) PricewaterhouseCoopers LLP's report on the financial statements of IOI for
the past two years contained no adverse opinion or disclaimer of opinion,
or was qualified or modified as to uncertainty, audit scope or accounting
principles.
(d) IOI has requested that PricewaterhouseCoopers LLP furnish it with a letter
addressed to the Securities and Exchange Commission (the "SEC") stating
whether it agrees with the above statements. A copy of
PricewaterhouseCoopers LLP's letter to the SEC, dated February 4, 1999, is
filed as Exhibit 16 to the Form 8-K.
ITEM 5. OTHER EVENTS
(a) Effective January 29, 1999, Mark P. Kingston resigned as Executive Vice
President and Chief Operating Officer of IOI.
(b) In January 1999, the Company and a subsidiary of the Company, IOI
Management Services of Connecticut, Inc. ("IOI Regional"), filed suit
against Merritt Orthopaedic Associates, P.C. ("Merritt"), Patrick J.
Carolan, M.D., ("Carolan"), and Mark E. Wilchinsky, M.D. ("Wilchinsky") in
the Superior Court for the Judicial District of Fairfield at Bridgeport,
Connecticut. The lawsuit seeks to enforce certain repurchase obligations
under the Management Services Agreement (the "MSA") by and among the
Company, IOI Regional, Merritt, Carolan and Wilchinsky. The MSA was
terminated by the Company in January 1999 due to the failure of Merritt,
Wilchinsky and Carolan to satisfy certain of their obligations thereunder.
Upon such a termination for cause, IOI Regional, in its sole discretion, is
entitled under the MSA to require Merritt to comply with certain repurchase
obligations regarding assets owned by IOI Regional and used by Merritt to
provide medical services and otherwise fulfill its obligations and the MSA,
including, without limitation, real estate, improvements, accounts
receivable, contracts and intangibles. The Company believes that the total
amount of Merritt's repurchase obligations to IOI Regional presently totals
approximately $4,666,000. In addition, the Company is seeking money
damages, compensatory damages and punitive damages in connection with
certain related causes of action against Merritt, Carolan, and Wilchinsky.
The Company intends to vigorously pursue its claims in connection with this
action; however, the ultimate outcome of this lawsuit cannot be predicted
with certainty.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibit
16. Letter re change in certifying accountant.
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SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTEGRATED ORTHOPAEDICS, INC.
Date: February 10, 1999 By: /s/ Gerald R. Wicker
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GERALD R. WICKER
Executive Vice President and Chief Financial Officer
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Exhibit 16
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
February 4, 1999
Ladies and Gentlemen:
Integrated Orthopaedics, Inc.
We have read Item 4 of Integrated Orthopaedics, Inc. Form 8-K dated February 3,
1999 and are in agreement with the statements contained in paragraphs 4(a)
through (d) therein, in so far as such statements relate to us.
Yours very truly,
/s/ PricewaterhouseCoopers, LLP
PricewaterhouseCoopers, LLP
