SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
April 17, 2001
IDM Participating Income Company - II
California 0-16832 33-0177934
(State of (Commission (Employer
incorporation) File Number) ID No.)
19401 South Vermont, Suite K100, Torrance, CA 90502
(Address)
(562) 590-1390
(Phone)
2424 S.E. Bristol Street, Suite 333, Newport Beach, CA 92660
(Former Address)
ITEM 1. Changes in Control of Registrant
(a) As of September 2000, a majority of limited partners voted to expel and
remove IDM Participating General Partners' Co.-II ("IDM GP") as the general
partner of the Registrant. As of that same date NewPic GP Corporation
("NewPic"), a company formed by four limited partners of Registrant, was elected
as replacement general partner. This vote was accomplished by solicitation of
consent/proxies from the limited partners. IDM GP was notified of the vote but
refused to acknowledge the change in control and refused to surrender
Registrant's records. NewPic and Registrant thus filed a lawsuit on October 25,
2000. On January 29, 2001, the United States District Court for the Central
District of California granted a Preliminary Injunction restraining IDM GP from
interfering with the operation of the Registrant by NewPic and compelling IDM GP
to turn over the Registrant's books and records to NewPic. IDM GP filed motions
to stay the Preliminary Injunction, but these motions were denied by the
District Court and the Ninth Circuit Court of Appeals. NewPic received the first
records of Registrant on February 21, 2001. IDM GP has filed an appeal of
issuance of the Preliminary Injunction, and that appeal is still pending as of
the date of this filing. Aside from the issues of change of control of the
Registrant and injunctive relief, the lawsuit also seeks damages in excess of
$8,500,000 from IDM GP and its affiliates and controlling persons for, among
other things, negligence, fraud, breach of fiduciary duty and violation of the
Registrant's charter documents.
NewPic GP Corporation was formed on October 27, 1999 for the sole purpose of
becoming the general partner of Registrant. The initial paid in capital of
NewPic consisted of $1,000. The shareholders of NewPic are Richard Meehan,
Wesley Groom, Jack Stellato and William Yetter. Each shareholder owns a 25%
interest in NewPic, and each is also a director of NewPic. All are limited
partners of Registrant. Except as set forth herein, the principals of NewPic
will not receive any compensation for services rendered to NewPic or the
Registrant. No consideration was given to the limited partners in respect of the
solicitation. No loans or pledges were obtained by the control group for the
purpose of acquiring control.
The following table sets forth certain information on NewPic's principals.
Name NewPic Position Limited Partnership Units Owned
Richard Meehan President, Director 1,000
Wesley Groom Secretary, Director 3,077.86
Jack Stellato Treasurer, Director 152.27
William Yetter Director 118.73
The principals of NewPic own an aggregate of 4,348.86 Units, or about 2.17% of
the outstanding limited partnership Units of Registrant. As general partner,
NewPic controls 1% of the outstanding Units of Registrant.
(b) There are no arrangements, known to the Registrant, the operation of which
may at a subsequent date result in a change in control of the Registrant.
ITEM 4. Changes in Registrant's Certifying Accountant
(a) In March 2001, Arthur Andersen LLP ("Andersen") was replaced as the
Registrant's independent accountant. Andersen was retained effective May 3, 2000
to conduct financial statement reviews in connection with Registrant's year 2000
first, second and third quarter SEC Form 10-Qs. In March 2001 IDM GP and its
controlling persons requested that Andersen not provide further auditing or
other services to the Registrant. Registrant and NewPic were engaged in
litigation with IDM GP, and Andersen was engaged by IDM GP's affiliates and
controlling persons to perform auditing and other services in connection with
their proposed consolidation of IDM GP's affiliates and controlling entities
into a proposed real estate investment trust, American Spectrum Realty, Inc.
During the period from May 2000 through March 2001, there were no disagreements
reported between the Registrant and Andersen on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures. Andersen was not retained to conduct any audits and did not issue
any audit reports, nor did Andersen issue any reports related to quarterly
reviews, pursuant to its engagement by Registrant. Registrant is currently
undertaking a review of services rendered by Registrant's auditors prior to
Andersen to ascertain the extent, if any, of errors, negligence or breach of
standard accounting practice or procedures.
(b) In March 2001 Registrant appointed Cacciamatta Accountancy Corporation
("CAC") as independent auditor. The Registrant has not consulted CAC on items
which (1) involved the application of accounting principles to a specified
transaction, either completed or proposed, or involved the type of audit opinion
that might be rendered on the Registrant's financial statements, (2) concerned
the subject matter of a disagreement or a reportable event with Registrant's
former accountants, or (3) relate to a review of services rendered by
Registrant's prior auditors.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(1) Not Applicable
(2) Not Applicable
(3) Exhibits
16.1. Letter from Arthur Andersen LLP, dated April 17, 2001 addressed to
the Securities and Exchange Commission in compliance with 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 hereunto duly authorized.
IDM PARTICIPATING INCOME COMPANY - II
A California Limited Partnership
By: NEWPIC GP CORPORATION
General Partner
By: /s/Richard Meehan
--------------------------------------
Name: Richard Meehan
Title: President
Date: April 17, 2001
EXHIBIT INDEX
Exhibit No. Description
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16.1. Letter from Arthur Andersen LLP, dated April 17, 2001 addressed to the
Securities and Exchange Commission in compliance with Item 304 of
Regulation S-K.