<PAGE>
UNITED STATES
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 (Date of earliest event reported) May 10, 1999
-------------------------------
THE TESSERACT GROUP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 1-11111 41-1581297
- --------------------------------------------------------------------------------
(State or other jurisdiction) (Commission File Number) (IRS Employer
of incorporation Identification No.)
9977 NORTH 90TH STREET
NO. 180
SCOTTSDALE, ARIZONA 85260
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (480) 767-2300
--------------------------
3800 WEST 80TH STREET, SUITE 1400, MINNEAPOLIS, MINNESOTA 55431
- -------------------------------------------------------------------------------
(Former Address, if Changed Since Last Report)
<PAGE>
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Effective May 10, 1999, Arthur Andersen LLP has resigned as
the independent accountant responsible for auditing the financial
statements of the TesseracT Group, Inc. (the "Company"). This
resignation was necessary because the Company is negotiating a
long-term outsourcing agreement with Arthur Andersen LLP and such
firm will begin providing certain accounting and information
processing services on an interim basis pending completion of the
outsourcing agreement.
The reports of Arthur Andersen LLP on the Company's financial
statements for the fiscal years ended June 30, 1997 and June 30, 1998
did not contain an adverse opinion or a disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or
accounting principles. During the fiscal years ended June 30, 1997
and June 30, 1998, and during the subsequent interim period, there
have been no disagreements between the Company and Arthur Andersen
LLP on any matter concerning accounting principles or practices,
financial statement disclosure or auditing scope or procedure which,
if not resolved to the satisfaction of Arthur Andersen LLP, would
have caused it to make reference to the subject matter of the
disagreement in connection with its reports.
Item 7. EXHIBITS.
16 Letter regarding change in certifying accountant.
99 Press release dated May 11, 1999.
<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.
THE TESSERACT GROUP, INC.
Date: May 14, 1999 By /S/ RICHARD C. YONKER
---------------------------------------
Richard C. Yonker
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. EXHIBIT PAGE
<S> <C> <C>
16 Letter regarding change in certifying accountant. Filed
Electronically
99 Press release dated May 11, 1999. Filed
Electronically
</TABLE>
<PAGE>
EXHIBIT 16
May 10, 1999
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madam:
We have read Item 4 included in the Form 8-K dated May 10, 1999 of
The TesseracT Group, Inc. to be filed with the Securities and Exchange
Commission and are in agreement with the statements contained therein.
Very truly yours
/s/ Arthur Andersen LLP
<PAGE>
EXHIBIT 99
NEWS RELEASE
The TesseracT Group, Inc. Announces Potential Outsourcing
Arrangements With Arthur Andersen and Withdrawal of Arthur
Andersen as Its Independent Auditors
PHOENIX--May 11, 1999--The TesseracT Group, Inc. (NASDAQ: TSST), today
announced that it is negotiating a multi-year strategic outsourcing agreement
with Arthur Andersen LLP designed to simplify and strengthen the finance and
accounting processes for its three business units: TesseracT Schools, Sunrise
Preschools and the Academy of Business College. As part of such negotiations,
Arthur Andersen will begin to provide certain accounting and information
processing services to the Company on an interim basis.
Because of these negotiations and interim accounting and information
processing services, Arthur Andersen LLP has withdrawn as the Company's
independent auditors in accordance with SEC requirements. Arthur Andersen LLP
had audited the financial statements of the Company since its inception. The
Company is currently interviewing other of the "Big Five" accounting firms to
replace Arthur Andersen as the Company's independent auditors for its fiscal
year ending June 30, 1999.
Under the arrangements being negotiated, beginning July 1, 1999, Arthur
Andersen Process Solutions would manage TesseracT's finance and accounting
department. The scope of services under this outsourcing agreement would include
financial reporting, general accounting, accounts payable, accounts receivable,
and information technology operations. These functions would operate under the
direction of TesseracT's Chief Financial Officer, Richard C. Yonker, who joined
the Company in April 1999. Arthur Andersen Process Solutions is a practice of
Arthur Andersen LLP that creates, implements and operates world-class business
process solutions that improve profitability and business performance of its
clients.
The TesseracT Group is an integrated education management organization
that provides educational services from preschool through post-secondary
education. The Company now operates 40 schools in six states serving over 5,000
preschool to post-secondary students. Based on previously announced agreements
to develop and operate additional charter schools, the Company expects to be
operating in excess of 45 schools, serving over 9,000 students, by September
1999.
This release contains forward-looking statements about the Company,
which are subject to risks and uncertainties and actual results may be
materially different. These statements include, but are not limited to,
statements herein regarding the opening of new charter schools and the
integration of services into single education facilities. Factors that
could cause actual results to differ from those expected include, but are
not limited to, governmental regulation, including the continued availability
of charter school legislation, the ability of the Company to successfully
integrate all of its services into single education
<PAGE>
facilities, and the factors described from time to time in the Company's reports
on file with the Securities and Exchange commission, including but not limited
to, the Company's Annual Report on Form 10-K for the year ended June 30, 1998.
Accordingly, there can be no assurances that any future results will be
achieved.
CONTACT: The TesseracT Group, Inc.
Richard C. Yonker
Vice President and CFO
480/767-2300
or
Investor Relations:
Cheryl Schneider/Tessa Lavender-Beck
Press: Michael McMullan
Morgen-Walke Associates, Inc.
212/850-5600
