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 11, 1998
POWERHOUSE RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 0-11546 84-0832977
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1764 Platte Street, Suite 200 (River Side), Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
1624 Market Street, Suite 303, Denver, Colorado 80202
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(Former Name or Former Address, if changed since last report)
Registrant's telephone number, including area code: 303-964-9156
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Item 4. Changes in Registrant's Certifying Accountant
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(a) KPMG Peat Marwick, LLP ("KPMG") was previously the principal accountant for
Powerhouse Resources, Inc. KPMG was appointed to conduct an audit of the
Company's 1995 accounts in March, 1995. A report dismissing the previous
accountants, Ehrhardt Keefe Steiner & Hottman PC, and appointing KPMG was
filed on May 9, 1995. KPMG performed certain audit work in October, 1995
through March 1996. However, the Company became financially unable to
continue to pay for such services and the work of KPMG was put in abeyance.
No report on the financial statements of the Company was ever issued by
KPMG. On February 24, 1998 KPMG's appointment as principal accountant was
terminated for economic reasons and Hein + Associates LLP has been engaged
as the Company's principal independent accountant with respect to the
September 30, 1995 fiscal year end and subsequent periods. The decision to
change accountants was approved by the Board of Directors of the Company.
(b) In connection with the work of KPMG for the fiscal year ended September 30,
1995 there were no disagreements with KPMG on any matter of accounting
principle or practice, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to their satisfaction would
have caused them to make reference in connection with their pinion to the
subject matter of the disagreement.
(c) As stated above, the audit by KPMG on the financial statements of the
Company as of and for the year ended September 30, 1995 was not completed.
Accordingly, KPMG did not render an opinion covering the financial
statements of the Company for the year ended September 30, 1995 or the
prior two years and as such there is no adverse or disclaimer of opinion.
The last audit report on the financial statements of the Company, (prior
name was Com-Tek resources, Inc.,) was reissued on March 28, 1995 and the
report did not contain any adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope, or accounting
principles. The reissued audit report of March 28, 1995 contained no
separate explanatory paragraph.
(d) The Registrant has requested that KPMG furnish it with a letter addressed
to the Securities and Exchange Commission stating whether it agrees with
the above statements. A copy of KPMG's letter to the Securities and
Exchange Commission is being filed as Exhibit A to this form 8-K.
Management has added additional information to provide a context to KPMG's
letter, see Exhibit B to this form 8-K.
(e) No consultations occurred between the Company and Hein + Associates LLP
prior to its appointment regarding the application of accounting
principles, the type of audit opinion that might be rendered, or any other
information which was considered by the Company in changing its principal
accountants.
Item 7. Financial Statements and Exhibits.
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Exhibits
(Exhibit A) Letter to KPMG dated February 24, 1998.
(Exhibit B) Response letter from KPMG dated May 11, 1998.
(Exhibit C) Management's supplement to KPMG's response letter.
SIGNATURES
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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.
POWERHOUSE RESOURCES, INC.
By: /s/ Dennis C. Dowd
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Dennis C. Dowd, President
Exhibit A
Date: May 11, 1998
POWERHOUSE RESOURCES, INC.
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1624 Market Street - Suite 303 - Denver, Colorado 80202 USA
Tel: (303) 595-8555 FAX: (303) 595-9144 Dennis C. Dowd, President
KPMG Peat Marwick, LLP
Attn: Rick Connor
707 17th Street
Suite 2300
Denver, Colorado 82020
Dear Rick:
We have engaged Hein + Associates LLP (H+A) to audit Powerhouse Resources,
Inc.'s financial statements for the years ended September 30, 1995, 1996 and
1997. In connection with their audit for the year ended September 30, 1995, we
would appreciate if you would allow them to review your working papers and fully
respond to any inquires they may have.
We understand and agree that the review of the KPMG Peat Marwick's working
papers is undertaken solely for the purpose of obtaining an understanding about
Powerhouse Resources and certain information about the procedures you performed.
We also acknowledge that you did not complete your audit nor issue any report
thereon, therefore, additional procedures would have been performed prior to the
preparation of an audit report. The extent of any additional procedures, and the
working of your report, if issued, is unknown. Because H+A's review is for that
purpose only and access to your working papers is limited, H_A will not comment
orally or in writing to anyone as a result of their review as to whether the
engagement was performed in accordance with generally accepted auditing
standards. In addition, H+A will not provide expert testimony, litigation
support services or otherwise accept an engagement to comment on issues relating
to the quality of the procedures you performed.
We are under a very difficult deadline and we would sincerely appreciate your
immediate attention to this request. Mr. Bill Yeates of H+A will call you to
schedule an appointment to review such workpapers and discuss the Company with
you. If you have any questions, please do not hesitate to contact me.
Sincerely,
/s/ Dennis Dowd
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Dennis Dowd
Exhibit B
KPMG Peat Marwick LLP
707 Seventeenth Street
Suite 2300
Denver, CO 80202
May 11, 1998
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
We were previously engaged as principal accountants to audit the consolidated
financial statements of Powerhouse Resources, Inc. and subsidiaries (Company) as
of and for the year ended September 30, 1995. On February 24, 1998 our
appointment as principal accountants was terminated. We have read the Company's
statements included under Item 4 of its Form 8-K dated May 11, 1998, and we
agree with such statements except that such statements should be revised to
disclose that (1) during the course of our incomplete audit of the financial
statements of the Company for the year ended September 30, 1995, we determined
that internal controls necessary for the Company to develop reliable financial
statements did not exist, in that the Company was unable to provide
documentation sorting certain related party transactions; (2) information came
to our attention that we were no longer able to rely on the representations of
management at the time, in that we became aware that the Company's then
Chairman, Malcolm Stone, and then chief Financial Officer, John Mottram, were
the subject of an investigation by the Serious Fraud Office in London into
activities involving the Company; and that (3) information came to our attention
that if investigated further could have materially impacted the fairness or
reliability of the financial statements under audit for the year ended September
30, 1995 but that due to our dismissal, we were not able to perform further
investigations, in that there was not adequate documentation supporting certain
identified related party transactions involving affiliates of certain members of
management.
We are not in a position to agree or disagree with the Company's stated reason
for changing principal accountants, the Company's statement concerning
previously issued or reissued audit reports on the financial statements of the
Company, the Company's statement that the change was approved by the board of
directors, and the Company's statement that Hein + Associates LLP was not
engaged regarding the application of accounting principles to a specified
transaction or the type of audit opinion that might be rendered on the Company's
financial statements. Furthermore, we make no comment regarding the Company's
statements included in exhibit "C", entitled "Management's Response to KPMG."
Very truly yours,
/s/ KPMG Peat Marwick LLP
Exhibit "C"
Management's response to KPMG
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1. During the time the KPMG audit services were rendered, the financial
operations of the Company were maintained in London under the control of
the Company's then Chairman, Mr. Malcolm Stone and its Finance Director Mr.
John Mottram. These parties are responsible for not providing proper
related party information to KPMG and the rest of Powerhouse's management
and Board of Directors.
2. It was initially the management of Powerhouse, other than Stone and Mottram
who alerted KPMG to certain transactions. Management then sought and
received the resignation of Mr. Mottram as Finance Director and Mr. Stone
as CEO and Chairman of the Board. It was solely the representations of
Stone and Mottram that KPMG could not rely upon and not other members of
the Powerhouse management or Board.
3. KPMG, as stated, never investigated beyond the initial question's regarding
the uncertainty of the referenced transactions. The management of
Powerhouse however did continue to investigate these transactions and
reported to and has cooperated fully with the London Serious Fraud Office
in their investigation of Stone and Mottram.
The Company's present auditors, Hein + Associates LLP have been appraised
of the activities of Stone and Mottram, the problems encountered by KPMG as
a result thereof. Present management will ensure that these transactions
and the appropriate disclosure statements will be fully contained in the
Company's forthcoming Exchange Act reports.