-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IDYMvnjlHJc7APCX6yANizTeQKMQLMHNNON/MdqQnmNaBMyjQoJcg51ZR1XPyG53 dErtIbucQpN+M7EG8stI5w== 0000950147-98-000327.txt : 19980504 0000950147-98-000327.hdr.sgml : 19980504 ACCESSION NUMBER: 0000950147-98-000327 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970403 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980501 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GATEWAY DATA SCIENCES CORP CENTRAL INDEX KEY: 0001002917 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 860527788 STATE OF INCORPORATION: AR FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27776 FILM NUMBER: 98607948 BUSINESS ADDRESS: STREET 1: 3410 E UNIVERSITY DR STREET 2: STE 100 CITY: PHOENIX STATE: AZ ZIP: 85034 BUSINESS PHONE: 6029687000 MAIL ADDRESS: STREET 1: 3410 E UNIVRSITY DRIVE STREET 2: SUITE 10 CITY: PHOENIX STATE: AZ ZIP: 85034 8-K 1 FORM 8-K 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): April 3, 1998 GATEWAY DATA SCIENCES CORPORATION --------------------------------- (Exact name of registrant as specified in its charter) ARIZONA 0-27776 86-0527788 ------- ------- ---------- (State or other (Commission File No.) (IRS Employer ID No.) jurisdiction of incorporation) 4802 E. Ray Road, Suite 23-286, Phoenix, Arizona 85044 ------------------------------------------------------ (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (602) 968-7000 3410 E. University Drive, Suite 100, Phoenix, Arizona 85034 ----------------------------------------------------------- (Former address, if changed since last report) GATEWAY DATA SCIENCES CORPORATION FORM 8-K CURRENT REPORT ITEM 4 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT Effective April 3, 1998, Gateway Data Sciences Corporation (the "Company") accepted the resignation of Arthur Andersen LLP ("Arthur Andersen") as its certifying accountants. Arthur Andersen's report on the Company's financial statements for the fiscal year ended January 31, 1997, contained a disclaimer of opinion, which included the following language: The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company had negative cash flow from operations of $2,612,680 for the year ended January 31, 1997, is in default of the terms of its line of credit agreement, does not have any readily available financing, is engaged in material litigation with a significant customer, recorded a net loss of approximately $700,000 (unaudited) for the six months ended July 31, 1997, and has not yet generated sufficient revenue from its software products to fund its ongoing operations. Additionally, its IBM reseller agreement expired in July 1997. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with regards to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. Because of the possible material effects of the matters discussed in the preceding paragraph, we are unable to express, and do not express, an opinion on the financial statements referred to above. During the term of Arthur Andersen's engagement, there were no disagreements between the Company and Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to the satisfaction of Arthur Andersen, would have caused it to make reference to the subject matter of the disagreements in connection with its report, except for the following: 2 (a) Arthur Andersen reported to the Company that, in the course of their review of the unaudited financial statements for the six months ended July 31, 1997, they identified irregularities or weaknesses in the Company's system of internal controls in the areas of (i) debt compliance; (ii) compliance with payroll withholding statutes; (iii) unauthorized sale of assets; and (iv) misapplication of certain cash receipts. (b) Arthur Andersen reported to the Company that, in the course of their audit of the Company's financial statements for the fiscal year ended January 31, 1997 and their review of the unaudited financial statements for the six months ended July 31, 1997, they discovered various conditions that they believed constituted material weaknesses in the Company's internal controls. These conditions consisted of (i) weaknesses in forecasting internal cash requirements; (ii) weaknesses in policies and procedures to ensure the accurate timing, classification, and recording of significant transactions; and (iii) weaknesses in maintaining formal documentation regarding acquisitions and dispositions of assets. The Company has previously reported these conditions and various steps the Company was taking to address these conditions in its Annual Report on Form 10-KSB for the year ended January 31, 1997 and Quarterly Reports on Form 10-QSB for the quarters ended April 30, 1997 and July 31, 1997. ITEM 5. OTHER EVENTS. On February 23, 1998, the Company filed a petition for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. The filing was made in the U.S. Bankruptcy Court in the District of Arizona in Phoenix, Arizona This action was a result of cash flow problems following the ongoing litigation between the Company and a large customer over payments totaling more than $3.8 million due the Company under a completed contract and the resulting financial damage that has been caused to the Company. The Company intends to continue to serve its customers and hopes to successfully reorganize while continuing to pursue its claim in the litigation. ITEM 7. EXHIBITS. Exhibit No. Description of Exhibit - ----------- ---------------------- 16 Letter Re: Change in Certifying Accountant 3 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. April 30, 1998 GATEWAY DATA SCIENCES CORPORATION By: /s/ Michael M. Gordon ------------------------------------- Michael M. Gordon President 4 EX-16 2 LETTER RE: CHANGE IN CERTIFYING ACCOUNTANT ARTHUR ANDERSEN ------------------------- Arthur Andersen LLP ------------------------- Suite 300 501 North 44th Street Phoenix, AZ 85008 602 286 2000 April 30, 1998 Securities and Exchange Commission Mail Stop 9-5 450 Fifth Street, N.W. Washington, D.C. 20549 We have read Item 4 included in the attached Form 8-K dated April 3, 1998 of Gateway Data Sciences Corporation to be filed with the Securities and Exchange Commission and are in agreement with the statements contained therein. Very truly yours, /s/ Arthur Andersen LLP -----END PRIVACY-ENHANCED MESSAGE-----