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CERTIFIED PUBLIC ACCOUNTANTS
200 SOUTH BISCAYNE BOULEVARD, SUITE 830 - MIAMI, FLORIDA 33131 -
TELEPHONE: 305.371.2731 - FAX: 305.377.8686
APRIL 28, 2006
Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
RE: EPIXTAR CORP. (THE COMPANY)
Dear Sirs/Madams:
We have read Item 4.01 of the Company's Form 8-K dated April 26, 2006, and have
the following comments:
1. We agree with the statements made in the first paragraph, the second
paragraph (except for the second sentence), the third paragraph (except for the
first sentence), the fourth paragraph, the fifth paragraph (except for the first
sentence), and the seventh, eighth, and tenth paragraphs.
2. We have insufficient bases to agree or disagree with the statements made in
the first sentence of the third paragraph (except for the second sentence) and
the entireties of the sixth, seventh and ninth paragraphs. Further, with respect
to the statements made in the second sentence of the second paragraph and in the
first sentence of the fifth paragraph, since we concluded that we could not rely
on the judgment and representations of management, we are unable to agree or
disagree therewith; however, we disagree with the attribution of the allegations
against Mr. Yeater, as set forth in the second sentence of the second paragraph,
to us.
A full presentation of our reasons for resigning this engagement are set forth
in our letter to the Company's audit committee dated April 21, 2006, a copy of
which is attached.
Sincerely,
/s/ Michael DeSiato
-----------------------------------
Michael DeSiato, CPA
McClain & Company, L.C.
cc: Martin Miller, CEO
Jack Cooney, Audit Committee Chairman
MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND
FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
[McCLAIN & COMPANY LOGO]
CERTIFIED PUBLIC ACCOUNTANTS
200 SOUTH BISCAYNE BOULEVARD, SUITE 830 o MIAMI, FLORIDA 33131
o TELEPHONE: 305.371.2731 o FAX: 305.377.8686
APRIL 21, 2006
Mr. Jack Cooney
Chairman, Audit Committee
Epixtar Corp
11900 Biscayne Blvd.
Suite 700
Miami, Florida 33181
Dear Mr. Cooney:
In the course of our engagement to audit the financial statements of
Epixtar, Corp. (The "Company") for the year ended December 31, 2005, certain
actions taken by the officers of the company have caused us to question the
judgment and decision-making of the Company's Management such that we are unable
to complete our engagement. After advising you of this, your actions through
your counsel, resulted in our independence being impaired. As a result, we are
required to seek to withdraw from our engagement. As you will appreciate, some
of these matters indicate weaknesses in the Company's internal controls and
give rise to questions regarding management's judgment. This will serve as our
communication to you and the Company's Board of Directors in this regard.
1. We learned in February 2006, that there were pending felony charges
against the Company's Chief Operating Officer dating back to November 2004, and
thereafter, on March 24, 2006, we advised you that we had learned that he had
pled guilty in this matter. Thereupon, management advised us that it first
became aware of this issue and the plea bargain the day before (March 23). These
failures to know of and immediately communicate material facts and events
regarding senior management constitute a material weakness in the Company's
internal controls. Further, the rationale given for the Company's decision to
retain this executive officer, and your continuing decision not to promptly,
publicly disclose the facts surrounding these circumstances has caused us to
further question your management's judgment and to lose trust in its willingness
to be forthcoming.
2. The Company recently filed, without our knowledge or consent, a Form
12b-25 which was inaccurate, incomplete and materially misleading. That
document, stated in part, that: "New auditors [our firm] were unable to complete
the preparation of the financial statements." Of course this representation is
both false and misleading. Any such disclosure commentary must be reviewed by us
in advance; had you provided us with the opportunity to read such document
before filing, we would have pointed out the obvious errors. Also, Rule
12b-25(c) requires when you refer to a public accountant in this context, that
the Form 12b-25 include a letter from the independent auditor stating the
specific reasons why the required opinion, report or certification could not be
furnished. This filing failure brings into question the adequacy of your
internal procedures for the preparation and review of the Company's public
disclosure documents. Further, we do not "prepare" the Company's financial
statements, and any such statement to that effect appears to compromise our
independence.
Mr. Jack Cooney
April 21, 2006
Page 2
3. Finally, as you may know, on Monday, April 10, 2006, we advised the
Company's bankruptcy counsel and management that, consistent with our duties, we
would seek to withdraw from the engagement. Specifically, we had lost confidence
in the judgment of the Company's management, resulting in our inability to
continue the engagement to audit the Company's financial statements (see our
engagement letter to you dated January 11, 2006) and necessitating our need to
seek the Bankruptcy Court's consent to resign and withdraw. By letter from your
bankruptcy counsel, dated April 11, 2006, we were threatened with legal action
if we pursued our decision to resign. This action by the company (through its
counsel) can only be read as an attempt to coerce the issuance of our opinion
with respect to the Company's financial statements, thereby compromising our
independence with respect to the company.
* * * *
On Wednesday, April 19, 2006 an "agreed order" providing for our
resignation (and for that of CBIZ Accounting, Tax & Advisory of South Florida,
LLC) was negotiated at a court-ordered mediation. This agreed order will be
submitted for Bankruptcy Court approval at a hearing scheduled for Monday, April
24, 2006.
Michael DeSiato
McClain & Company, L.C.
cc: Dennis Olle, Esq.
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