SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 28, 1999
THE NETPLEX GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 001-11784 11-2824578
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1800 Robert Fulton Drive, Suite 250, Reston, Virginia 29191-9992
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (703) 716-4777
<PAGE>
Item 4 Changes in Registrant's Certifying Accountant
Attached as exhibit 16.1 is the response of KPMG Peat Marwick to the
Company's request, in accordance with Item 304 of Regulation S-K, that KPMG Peat
Marwick indicate its agreement or disagreement with the Company's statements
made in the Form 8-K filed by the Company on May 21, 1999. The Company notes
that the letter purported to be dated on May 13, 1999 from KPMG Peat Marwick to
the Company's Audit Committee was first, in fact, delivered to the Company by
facsimile after the Company's Form 8-K was filed on Friday, May 21, 1999. (Such
letter is also attached as exhibit 16.2.)
The Company disagrees with the former accountant's assertion of a
"reportable condition" under the AICPA and furthermore, the Company is of the
view that the "reportable condition" described in the former accountant's letter
delivered May 21, 1999 does not rise to the level of a "reportable event" as
defined in Item 304 of Regulation S-K.
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.
June 2, 1999
THE NETPLEX GROUP, INC.
By: /s/ GENE ZAINO
----------------------------------
Gene Zaino
Chairman, President and C.E.O.
EXHIBIT 16.1
[KPMG LETTERHEAD]
May 28, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
KPMG LLP ("KPMG") was previously the principal accountants for The Netplex
Group, Inc. (the "Company") and under date of April 19, 1999, we reported on the
consolidated financial statements of the Company as of and for the years ended
December 31, 1998 and 1997. We terminated our appointment as principal
accountants on May 14, 1999. We have read the Company's statements included in
Item 4 of its Form 8-K dated May 21, 1999 ("Item 4") and we agree with those
statements, except as follows:
KPMG is not in a position to agree to disagree with the statement in the second
sentence of the first paragraph of Item 4, to the effect that "the Board of
Directors and the Audit Committee did not recommend KPMG for election by the
stockholders as the Company's certifying accountants in its definitive proxy
materials."
KPMG does not agree with the statement in the fifth paragraph of Item 4, to the
effect that "in connection with the audits of the Company's consolidated
financial statements for each of the two fiscal years ended December 31, 9998
and 1997, there were no reportable events, as that term is defined in the
instructions to Form 8-K."
In a letter to the Audit Committee dated May 13, 1999, KPMG advised the Company
that KPMG believed that there was a matter involving the Company's internal
control structure and its operation that we considered to be a reportable
condition under standards established by The American Institute of Certified
Public Accountants ("reportable condition"). The matter referred to the lack of
an adequate system of financial reporting, and more specifically, indicated the
following:
o During our audit of the Company's 1998 financial statements we noted that
the Company had to seek extensions on several of its required filings with
the Securities and Exchange Commission and also had to amend the Form
10-Q's previously filed for the first 3 quarters of 1998.
o Our belief that the Company's system of financial reporting is not adequate
to enable the Company to report accurate and timely financial information.
o Our belief that the Company's process for accumulating financial data does
not provide management with sufficient time to evaluate the data in an
effort to ensure
<PAGE>
accurate financial reporting, nor to enable the Company to meeting
financial reporting deadlines in a timely manner.
o Our belief that the Company's system of financial reporting does not
include a periodic process of evaluating the Company's financial reporting
policies in light of significant events or changes in circumstances which
might impact those policies.
KPMG is not in a position to agree or disagree with the first sentence of the
seventh paragraph of Item 4, to the effect that "the Company is engaged in the
process of selecting another firm to act as the Company's independent
accountants."
Very truly yours,
KPMG LLP
EXHIBIT 16.2
[KPMG LETTERHEAD]
Confidential
Audit Committee
The Netplex Group, Inc.
8260 Greensboro Drive, Fifth Floor
McLean, VA 22102
May 13, 1999
Ladies and Gentlemen:
We have audited the financial statements of The Netplex Group, Inc. and
subsidiaries for the period ended December 31, 1998 and have issued our report
thereon dated April 19, 1999. In planning and performing our audit of the
financial statements of The Netplex Group, Inc. and subsidiaries we considered
internal control in order to determine our auditing procedures for the purpose
of expressing our opinion on the financial statements. An audit does not include
examining the effectiveness of internal control and does not provide assurance
on internal control.
The maintenance of adequate internal controls designed to fulfill control
objectives is the responsibility of management. Because of inherent limitations
in internal control, errors or fraud may nevertheless occur and not be detected.
Also, controls found to be functioning at a point in time may later be found
deficient because of the performance of those responsible for applying them, and
there can be no assurance that controls currently in existence will be adequate
in the future as changes take place in the organization.
We noted a certain matter involving internal control and its operation that we
consider to be a reportable condition under standards established by the
American Institute of Certified Public Accountants. Reportable conditions are
matters coming to our attention that, in our judgment, relate to significant
deficiencies in the design or operation of internal control and could adversely
affect the organization's ability to record, process, summarize, and report
financial data consistent with the assertions of management in the financial
statements. Our consideration of internal control would not necessarily disclose
all matters in internal control that might be reportable conditions.
The reportable condition noted during our audit is summarized as follows:
System of Financial Reporting
In our letter dated June 16, 1998, with respect to the audit of the 1998
financial statements of the Company, we recommended that the Company improve the
timeliness of its filings with the Securities and Exchange Commission (SEC).
<PAGE>
During our audit of the 1998 financial statements we noted that the Company had
to seek extensions on several of its required filings with the Securities and
Exchange Commission and also had to amend the Form 10-Q's previously filed for
the first 3 quarters of 1998. We believe that this is the result of the
Company's system of financial reporting not being adequate to enable the Company
to report accurate and timely financial information. We believe that the
Company's process for accumulating financial data does not provide management
with sufficient time to evaluate the data in an effort to ensure accurate
financial reporting, nor to enable the Company to meeting financial reporting
deadlines in a timely manner. In addition, we believe that the Company's system
of financial reporting does not include a periodic process of evaluating the
Company's financial reporting policies in light of significant events or changes
in circumstances which might impact those policies.
We recommend that the Company establish a more sound system of financial
reporting. Such a system would include establishing reasonable deadlines for
accumulation of financial data, and creating an environment in which management
has the ability to evaluate the accuracy of the financial data. In addition, the
system would take into consideration the time necessary for outside advisors
(i.e. lawyers, accountants) to perform necessary and required procedures with
respect to the Company's financial reporting. Further, the system should also
include a periodic process of evaluating the adequacy and appropriateness of the
Company's financial reporting policies.
This condition was considered in determining the nature, timing, and extent of
the audit tests applied in our audit of the 1998 financial statements, and this
report does not affect our report on these financial statements dated April 19,
1999. We have not considered internal control since the date of our report.
This report is intended solely for the information and use of the audit
committee, management, and others within the organization.
Very truly yours,
KPMG LLP
