_________________________________________________________________
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) July 27, 1998
EQUIMED, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27456 25-1668112
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Ident. No.)
2171 Sandy Drive, State College, PA 16803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (814) 238-0375
N/A
(Former name or former address, if changed since last report.)
_________________________________________________________________
<PAGE>
Item 4. Change's in Registrant's Certifying Accountant.
The following information is set forth in accordance
with the relevant provisions of Item 304 of Regulation S-K:
Item 304(a)(1)--
(i) On July 28, 1998, Ernst & Young LLP resigned as
the independent accountants of the Registrant.
(ii) The Registrant's Annual Report on Form 10-K for
the year ended December 31, 1997 has not been
filed as of the date of this Report. The report
of Ernst & Young LLP on the financial statements
for the fiscal year ended December 31, 1996
contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principle.
(iii) Not applicable.
(iv) During the two most recent fiscal years and
through July 28, 1998, the Registrant believes
that there have been no "disagreements" (as
defined in Item 304(a)(1)(iv) of Regulation S-K)
with Ernst & Young LLP on any matter of accounting
principles or practices, financial statement
disclosure, or auditing scope or procedure, which
agreements, if not resolved to the satisfaction of
Ernst & Young LLP, would have caused them to make
reference thereto in their report on the financial
statements for such years. The Registrant
believes that the resignation of Ernst & Young LLP
results from a fee dispute relating to the audit
of the Registrant's financial statements at and
for the period ended December 31, 1997. The
Registrant has initiated litigation against
Ernst & Young LLP in Pennsylvania state court as
described in the press release attached hereto as
Exhibit 99.1, which press release is incorporated
herein by reference.
(v) During the two most recent fiscal years and
through July 28, 1998, the Registrant believes
that there have been no "reportable events" (as
defined in Item 304(a)(1)(v) of Regulation S-K)).
The Company believes that the resignation of
Ernst & Young LLP results from a fee dispute
relating to the audit of the Registrant's
financial statements at and for the period ended
December 31, 1997. The Registrant has initiated
litigation against Ernst & Young LLP in
Pennsylvania state court as described in the press
release attached hereto as Exhibit 99.1, which
press release is incorporated herein by reference.
<PAGE 1>
Item 304(a)(3)--
The Registrant has requested Ernst & Young LLP to
furnish it with a letter addressed to the Securities and
Exchange Commission stating whether or not it agrees with
the above statements. A copy of such letter will be filed
by amendment to this Report.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements: NONE
(b) Exhibit:
(i) 16 Accountants' letter received by the
Registrant pursuant to Item 304(a)(3) of
Regulation S-K.*
(ii) 99 Press Release of the Registrant, dated
August 11, 1998.
* To be filed by amendment.
PAGE 2
<PAGE>
SIGNATURE
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.
EQUIMED, INC.
Dated: August 14, 1998 /s/ Douglas R. Colkitt
Douglas R. Colkitt
President and Chief Executive
Officer
PAGE 3
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
99 Press release of the Registrant, dated
August 11, 1998. <PAGE 4>
Exhibit 99
FOR IMMEDIATE RELEASE
CONTACT:
Mr. George Keister
Chief Financial Officer
EquiMed, Inc.
(814) 238-0375
EQUIMED SUES ERNST & YOUNG FOR $75 MILLION
OVER WITHHELD AUDIT REPORT
State College, PA -- (August 11, 1998) -- EquiMed, Inc. (OTC BB:
EQMD) announced today that it has filed a lawsuit which seeks no
less than $75 million in damages from the accounting firm of
Ernst & Young, LLP. The lawsuit alleges that Ernst & Young,
after having been paid approximately $1 million in connection
with the preparation of its Report of Independent Auditors
pertaining to EquiMed's 1997 year-end financial statements,
refused to issue the final report and the corresponding audit
unless EquiMed agreed to pay an additional $1.6 million in fees
and expenses. EquiMed alleges that, despite its multiple
requests, Ernst & Young has been unable to produce adequate
documentation to support the additional fees and expenses for
which it seeks payment.
In the three-count Complaint recently filed in the Pennsylvania
Court of Common Pleas, EquiMed alleges that Ernst & Young's
withholding of the Report of Independent Auditors because of the
fee dispute prevented EquiMed from filing its Form 10-K for the
fiscal year ended December 31, 1997 with the Securities and
Exchange Commission and resulted in the recent delisting of
EquiMed from the NASDAQ stock market.
In chronicling the fee dispute, the Complaint alleges that
Ernst & Young's failure to issue the Report of Independent
Auditors, and any audit regarding EquiMed's 1997 financials,
breached the agreement which Ernst & Young had with EquiMed to
provide such services and that such failure constituted
negligence on the part of Ernst & Young.
The Complaint also alleges that Ernst & Young fraudulently
overstated its professional fees and expenses in its billings to
EquiMed, that EquiMed repeatedly requested detailed documentation
from Ernst & Young to support the accounting firm's billings, and
that Ernst & Young claimed it had no such documentation to
produce.
EquiMed has established an internet website in connection with
the lawsuit with Ernst & Young. Information about the lawsuit
will be available tomorrow at http://www.eylawsuit.com.
Ernst & Young resigned as EquiMed's independent auditors in late
July of this year. Accordingly, EquiMed is in the process of
<PAGE 1> obtaining new independent auditors and it is impossible
to determine when EquiMed's 1996 Form 10-K will be filed with the
SEC. EquiMed is requesting that the SEC investigate the conduct
and billing practices of Ernst & Young.
EquiMed also announced today that George Keister has been named
its Chief Financial Officer. For the past fifteen months,
Mr. Keister has served as Director for Financial Reporting for
Trident International Management, Inc. He previously has served
in various financial capacities with Continental Bank, Ametek,
Inc., and Rohm & Haas.
EquiMed is a transnational medical practice management services
and outsourcing company. It provides oncology and anesthesiology
services in selected geographical markets through its network of
specialty medical providers, as well as a host of other medical
and non-medical management and data processing services both
domestically and internationally.
This press release contains certain forward-looking statements
which involve certain significant risks and uncertainties, as
described in EquiMed's filings with the Securities and Exchange
Commission. EquiMed's actual results may differ materially from
those described in such forward-looking statements. <PAGE 2>
