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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
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 4, 2000
FLOORING AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 1-13099 58-2060334
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
210 TOWNPARK DRIVE
KENNESAW, GEORGIA 30144
(678) 355-4000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Item 4. Changes in Registrant's Certifying Accountant.
(a) (i) As of January 4, 2000, Flooring America, Inc. (formerly known as
The Maxim Group, Inc. and hereinafter referred to as the "Company") terminated
the engagement of Arthur Andersen LLP as the Company's independent accountant to
audit the Company's financial statements.
(ii) The audit report of Arthur Andersen LLP on the consolidated
financial statements of the Company as of and for the year ended January 31,
1999, did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope, or accounting
principles, except that Arthur Andersen LLP's report on the consolidated
financial statements of the Company as of and for the year ended January 31,
1999 contained a separate paragraph stating:
"The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company
is not in compliance with a certain restricted payment
covenant contained in the indenture which references the
Company's $100 million Senior Subordinated Notes due October
2007 (the 'Senior Notes') and as a result, the trustee or the
holders of not less than 25% of the Senior Notes may declare
all unpaid principal plus any accrued interest of all of the
Senior Notes due and payable. The Company's available
borrowings under its Senior Credit Facility plus cash on hand
are not sufficient to repay the Senior Notes if declared due
and payable. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1.
The financial statements do not include any adjustments
relating to the recoverability and classification of asset
carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to
continue as a going concern."
(iii) The decision to consider a change in independent accountants was
recommended to the Company's Audit Committee on November 8, 1999. Upon receiving
and approving that recommendation, on December 22, 1999 the Audit Committee
delegated to the Chief Financial Officer the authority to decide when and if to
dismiss Arthur Andersen LLP.
(iv) In connection with the audits of the two fiscal years ended
January 31, 1998 and 1999 and through the date of this report, the Company has
not had any disagreements with Arthur Andersen LLP on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreement(s), if not resolved to the satisfaction of Arthur
Andersen LLP would have caused Arthur Andersen LLP to make reference thereto in
their report on the consolidated financial statements of the Company for such
periods.
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(v) Except as noted herein, during the Company's two most recent fiscal
years, and through the date of this report, the Company has not had any
reportable events as defined in Item 304(a)(1)(v) of Regulation S-K. In
connection with Arthur Andersen LLP's audit of the fiscal year end January 31,
1999, Arthur Andersen LLP did advise the Company that material weaknesses and
significant deficiencies existed in the internal controls of the Company that
could adversely affect the Company's ability to record, process, summarize and
report financial data consistent with the assertions of management in its
financial statements. The Company responded to Arthur Andersen LLP's letter by
investigating the matters raised by such letter and addressing and taking
appropriate actions designed to correct the noted weaknesses and deficiencies.
(vi) The Company has requested that Arthur Andersen LLP furnish it with
a letter addressed to the Securities and Exchange Commission stating whether it
agrees with the statements made in subsections (i), (ii), (iv) and (v) above. A
copy of that letter dated January 10, 2000 is filed as Exhibit 16 to this Form
8-K.
(vii) On January 10, 2000 the Company retained and appointed the
accounting firm of Ernst & Young LLP as the Company's new independent
accountants to audit the Company's financial statements for the fiscal year
ending February 5, 2000. The decision to retain and appoint the accounting firm
of Ernst & Young LLP has been approved by the Company's Audit Committee and its
Board of Directors. Neither during the Company's two most recent fiscal years,
the interim period ended November 6, 1999, nor through the date of this filing,
did the Company consult with Ernst & Young LLP regarding either the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the financial
statements of the Company.
Item 7. Financial Statements and Exhibits
Exhibit
Number Exhibit
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16 Letter of Arthur Andersen LLP dated January 10, 2000 regarding
change in certifying accountant.
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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 hereunto duly authorized.
FLOORING AMERICA, INC.
Date: 1-11-2000 /s/ LEONARD H. THILL
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By: Leonard H. Thill
(Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
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16 Letter to Securities and Exchange Commission from Arthur
Andersen LLP dated January 10, 2000
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ARTHUR
ANDERSEN
EXHIBIT 16
January 10, 2000 _________________________
Arthur Andersen LLP
_________________________
Republic Centre
Office of the Chief Accountant 633 Chestnut Street
Securities and Exchange Commission Chattanooga, TN 37450-1500
450 Fifth Street, N.W. 423 756 5000
Washington, D.C. 20549
Dear Sir/Madam:
We have read paragraphs (i), (ii), (iv), and (v) of Item 4(a) included in the
Form 8-K dated January 4, 2000 of Flooring America, Inc. (formerly The Maxim
Group, Inc) to be filed with the Securities and Exchange Commission and are in
agreement with the statements contained therein, with the following
exception. The Company states in paragraph (v) that they are addressing and
taking appropriate actions designed to correct the noted internal control
weaknesses and deficiencies. We are not in a position to comment on the
results of the Company's actions because we have not performed an audit as of
any date, or for any period, subsequent to January 31, 1999.
Very truly yours,
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Copy to:
Mr. Leonard H. Thill CFO, Flooring America, Inc.
