SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event report): April 3, 2000
DETOUR MAGAZINE, INC.
(Exact Name of Registrant as Specified in Charter)
Colorado 0-25388 84-1156459
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
7060 Hollywood Blvd., Suite 1150
Los Angeles, California
(Address of Principal Executive Officers)
90028
(Zip Code)
(213) 469-9444
(Registrant's Telephone Number)
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ITEM 5. OTHER EVENTS
The staff of Salt Lake City District office of the Securities and Exchange
Commission ("SEC") has notified the Company and its Chairman, Edward T. Stein,
that it is recommending to the SEC that an enforcement action be filed against
both the Company and Mr. Stein relating to accuracy of certain of the Company's
financial statements in 1997 and 1998. Based on discussions between the staff
and the Company's counsel, the Company believes that the enforcement action
would be based on: (i) the improper presentation of certain quarterly financial
information; and (ii) the failure to record in accordance with generally
accepted accounting principles the proper compensation expense resulting from
the issuance in 1997 of options to purchase 2,200,000 shares of Common Stock in
1997 to consultants.
The Company believes that the issue regarding improper presentation of
quarterly financial information relates to the Company's averaging of certain
costs and expenses in certain quarterly periods in 1997 and 1998 instead of
calculating these costs and expenses precisely. To comply with the staff's
requirement, the Company would be required to determine the actual costs and
expenses for the affected quarters. The Company is uncertain of what, if any,
actual adjustments would be made or the magnitude of such adjustments. No
allegation has been made as to the accuracy of these costs and expenses in the
related annual financial statements, and the Company does not believe that any
of these quarterly adjustments would result in any change in the Company's
reported net income for 1997 and 1998.
The second issue relates to whether the Company recorded the proper amount
of compensation expense in connection with the issuance of the options to the
consultants. The Company recorded an expense of $22,000, based on the exercise
price of the options of $.01 per share. The Company understands that the staff
believes that the expense should be the fair market value of the options at the
time the options were issued. Under generally accepted accounting principles,
any such additional compensation expense in connection with the options would
result in a corresponding increase in the paid-in capital of the Company. Thus,
while the expense would increase the Company's net loss for 1997, the
paid-in-capital would be similarly increased and there would be no change to the
Company's total stockholders' equity as of the end of 1997.
The Company has determined to restate the questioned financial statements
to address the concerns raised by the staff. The Company has advised the staff
of this intention, and is presently involved in discussions with the staff to
resolve the matter.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
(C) EXHIBITS.
Exhibit 16.1 Letter of Marcum & Kliegman LLP
Page 2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: April 12, 2000 DETOUR MAGAZINE, INC.
By: /S/ EDWARD T. STEIN
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Name: Edward T. Stein
Title: Chairman of the Board
Page 3
[LETTERHEAD OF MARCUM & KLIEGMAN LLP]
April 7, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We have read Item 4 of Form 8-k dated March 22, 2000, of Detour Magazine, Inc.
and are in agreement with the statements contained therein.
We understand that Detour Magazine, Inc. is under formal investigation by the
Securities and Exchange Commission, as a result of this investigation it is
possible that the Company may be restating its financial statements at and for
the two years ending December 1998, to give effect the expenses of granting
stock and options in December 1997 and 1998 to employees, consultants, officers
and directors.
Our report (dated March 19, 1999, except for Note 12, which is dated April 14,
1999) on the balance sheet of Detour Magazine, Inc. as of December 31, 1998, and
the related statements of operations, accumulated deficit and cash flows for the
two years ended December 31, 1998 should have not be relied upon and has been
withdrawn. Further, we have not been engaged to reaudit the 1997 and 1998
financial statements.
Very truly yours,
/S/ MARCUM & KLIEGMAN LLP
Marcum & Kliegman LLP
