|If you look back over the history of this company, you'll see it stinks on ice. |
Here's a letter from their prior accounting firm to the SEC.
Stonefield Josephson, Inc.
Certified Public Accountants
July 30, 2003
BY FAX (202) 942-9656 AND CERTIFIED MAIL
U.S. Securities and Exchange Commission
Office of Chief Accountant
450 5th Street NW
Washington, DC 20549
Re: Global Medical Products Holdings, Inc. - Cessation of Auditor Relationship
We inform you that the auditor relationship between Global Medical Products
Holdings, Inc. and Stonefield Josephson, Inc. has ceased effective July 23,
We had been engaged to audit the financial statements of Global as of December
31, 2002 and for the year then ended, which audit was never completed. During
our attempts to perform the audit, there were disagreements between management
and our firm as to matters of accounting principles or practices, financial
statement disclosure, and auditing scope and nature, which, if not resolved to
our satisfaction, would have caused reference to these matters in our auditors'
During our auditor, matters came to our attention requiring us to significantly
increase the scope of our audit and, if further investigated might materially
impact a previously issued financial statement.
A summary of these matters, as required to be reported by Regulation S-K, Item
GLOBAL GLASS SOURCE ACQUISITION - The company had stated that it had entered
into an agreement in August 2002, for the purchase of Global Glass Source, a
Hong Kong corporation. The consideration was the issuance of shares in December
2002 to a "designated agent". We had requested information on the acquiree, such
as legal opinion of Chinese counsel relating to the acquisition, evidence of
delivery of capital stock of the acquired corporation, and financial statements
of the acquiree. This information was necessary both for purposes of financial
statement disclosures required by SFAS No. 141, as well as evidential matter to
substantiate the acquisition. As of July 15, 2003 management had informed us
that no such information was forthcoming.
There were certain changes in the terms set forth in different versions of the
acquisition agreement. Accordingly we requested that we confirm the terms
directly with the sellers. Management stated in a letter dated July 15, 2003
"There is no need to confirm".
LITIGATION SETTLEMENT - The company had recorded settlement of litigation in the
amount of $1,855,551 in 2002, based upon a settlement agreement dated December
2001. We had questioned why the liability had not been originally accrued at
December 31, 2001, as the settlement agreement presumably characterized the
amount as a liability which met the recognition criteria of SFAS No. 5 at that
date. We discussed this matter with the predecessor auditor, who had indicated
that he believed that they had EX-16.1 evidential matter substantiating its
recording in 2002, but was not aware of the December 2001 agreement, for which
we subsequently furnished a copy to them.
We asked that the company obtain a response from the predecessor auditor as to
whether, in light of this December 2001 document which they purportedly did not
have, the financial statements should be amended. Management stated in its
response to us "This does not require an answer from Weinberg".
RECORDING OF INVESTMENT TRANSACTIONS - During the audit we reviewed various
correspondence that indicated that there were investments that were made in the
prior year of which the company could not furnish evidence as to recording. When
we inquired as to the appropriate accounting for several of these investments,
management informed us (i) "Investments made by the Barren-Benz Investment
Groups were not recorded during the year 2001. A cursory review of the financial
statements audited by Weinberg & Company P.A. does not indicate any entry as to
the ..... investments", (ii) "None of these items were booked into the financial
records of Global Medical Products Holdings", and (iii) "This funding was never
booked by the company as a benefit to the Benz group during 2001 and the funds
were retained by Kallmann".
We were unable to conclude as to the appropriate accounting for these
transactions based on the information that we received from management.
Inaccurate Statements in Forms 10-QSB and 10-KSB. - We received notice of
termination on July 23, 2003. In a telephone conversation with Mr. Douglas P.
Brown, President, Director and Acting Chief Financial Officer on July 24, 2003,
we informed Mr. Brown that there were reportable disagreements which must be
disclosed in our letter to be attached to the From 8-K reporting the change in
auditors. Mr. Brown responded by saying that he did not acknowledge that there
were disagreements and that he would be reporting the change in auditors in an
upcoming Form 1-QSB.
In Item 5, Part II of the company's Form 10-QSB and in Item 8 of Form 10-KSB,
both of which were filed on July 28, 2003, the company states in part, "As of
the date of this filing the Company is not aware of any written disagreements
between the Company and Stonefield Josephson, Inc. on any matter of accounting
principles, financial statement disclosures or auditing scope and procedure,
which disagreements, if not resolved to the satisfaction of Stonefield
Josephson, Inc. would have caused that accounting firm to make reference to the
subject matter of the disagreement in connection with its report."
While this statement may be technically correct - i.e. there were no WRITTEN
disagreements - we did specifically inform Mr. Brown verbally in our July 24
telephone conversation that there were, indeed, reportable disagreements.
As required by Item 304(a)(1)(iv)(B) of Regulation S-K we report that these
items were discussed at varying times with members of the board of directors,
Messrs. Karl R. Rolls and Douglas P. Brown. We were informed that the company
does not have a separate audit committee, so all communications were directly
with the board members.
/s/ Stonefield Josephson, Inc.
Stonefield Josephson, Inc.
Santa Monica, California