Section
4 – Matters Related to Accountants and Financial Statements
Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review
Our
management has determined that we need to amend our Annual Report on Form 10-K
for the year ended September 30, 2006, including restating our financial
statements. This Annual Report was originally filed with the
Commission on Form 10-K on January 16, 2007, as a First Amended Annual
Report on Form 10-K/A on January 24, 2007, and as a Second Amended Report on
Form 10-K/A on January 15, 2008. The purpose of this amended
Annual Report is to make corrections to the Annual Report, primarily to the
Items entitled Description of Business, Risk Factors, Management’s Discussion
and Analysis and the Financial Statements.
The
revisions to our financial statements primarily relate to our accounting for a
government grant, our disclosure related to a long term debt obligation, the
reduction in the accrual for equipment leased from an related company, our
disclosure related to Item 302 of Regulation S-K, and regarding the failure to
include Schedule I financial statements in accordance with Rule 5-04(c) of
Regulation S-X. The grant was originally accounted for as a
“reduction in operating expenses.” The restated financial statements
will reflect: (i) the reclassification of the government grant as a reduction of
fixed assets of $349,888 for the portion of the government grant that was
originally accounted for as income and the related reduction in depreciation
expense of $34,989, and (ii) the fact that after further review of the grant
documents, it was determined that $323,363 of the government grant that was
originally accounted for as income was due to be repaid and, accordingly, will
be reclassified to long-term debt. Regarding the reduction in the
accrual for leased equipment, we originally accrued $694,136 for the equipment
lease, but are now reducing this accrual by $350,000 to $344,136, due to the
fact the lease accrual was originally recorded as if the lease was for a year,
when in fact the lease was only for a few months. The restated
financial statements will also include Item 302 of Regulation S-K disclosure and
Schedule I financial statements in accordance with Rule 5-04(c) of Regulation
S-X. Therefore, we will be filing a Third Amended Annual Report on
Form 10-K/A for the year ended September 30, 2006, to make the necessary
changes.
Our authorized officers have discussed
the matters disclosed in this filing with our independent registered public
accounting firm. We anticipate that restated financial statements for
the effected period will be filed with the Securities and Exchange Commission in
the near future.
When we
complete our restated financial statements we will file an Amended Form 8-K/A
amending this Form 8-K and attaching those financial statements, in tabular
format, with the original reported amounts, the adjustments made, and the
current restated amounts for each of the affected categories as they will be
reported in our restated consolidated financial statements filed with our Third
Amended Annual Report on Form 10-K/A.