U.S. 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): December 3, 2004
AMERICAN PETROLEUM GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
000-49950 98-0232018
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(Commission File No.) (IRS Employer Identification No.)
1400 N. Gannon Drive
2nd Floor
Hoffman Estates, IL 60194
(847) 805-0125
(Address and telephone number of principal executive offices
and place of business)
AMERICAN CAPITAL ALLIANCE, INC.
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(former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below)
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13ed-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 4 -- MATTERS RELATED TO ACCOUNTANTS AND FINANCIAL STATEMENTS
ITEM 4.01-DISSMISSAL AND APPOINTMENT OF AUDITORS
On November 16, 2004, the current Interim President of the Registrant in
discussions with Amisano Hanson, became aware that the Registrant had not
properly informed Amisano Hanson of its dismissal, and the Registrant had failed
to comply with the notification provisions of Form 8-K for dismissal of the
previous auditor and appointment of the new auditor. Accordingly, the current
management, on November 16, 2004 notified its previous independent auditor,
Amisano Hanson, Chartered Accountants, 750 West Pender Street, Suite 604,
Vancouver Canada, V6C 2T7, 604-689-0188, that it was replaced as the Independent
Auditor of the Registrant, by Brown Smith Wallace LLC. This action was
previously approved by the Board of Directors sometime on February 19, 2004.
Members of The Board of Directors and Officers of the Registrant have discussed
these facts with Amisano Hanson, and have discussed the actions necessary to
correct the problem.
THE AUDIT REPORTS OF, AMISANO HANSON, CHARTERED ACCOUNTANTS, 750 WEST PENDER
STREET, SUITE 604, VANCOUVER CANADA, V6C 2T7, 604-689-0188 ON THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL YEARS ENDED DECEMBER
31, 2002 AND 2001 DID NOT CONTAIN AN ADVERSE OPINION OR A DISCLAIMER OF OPINION,
OR MODIFIED AS TO AUDIT SCOPE OR ACCOUNTING PRINCIPLES, HOWEVER THE AUDITORS
QUALIFIED THEIR REPORT AS TO THE UNCERTAINTY THAT THE COMPANY WOULD CONTINUE AS
A GOING CONCERN. During the period of their engagement, there were no
disagreements between Amisano Hanson, and the Registrant 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
Amisano Hanson, would have caused them to make reference to the subject matter
of the disagreement in connection with its reports on the Registrant's financial
statements, other than the fee dispute that has arisen between the parties.
The Registrant has furnished Amisano Hanson with a copy of this report and has
requested them to furnish a letter addressed to the Securities and Exchange
Commission stating whether it agrees with the above statements. A copy of the
resignation letter is to be attached as Exhibit 16 to this Form 8-K.
On February 19, 2004, the management of the Registrant engaged Brown Smith
Wallace LLC, located at 1050 N. Lindbergh Blvd. St. Louis, MO 63132, Telephone
314.983.1200, as its independent auditors to audit its financial statements for
the fiscal year ended December 31, 2003. The decision to retain Brown Smith
Wallace LLC was approved by the Registrant's board of directors at that time.
Prior to the engagement, Registrant did not consult with Brown Smith Wallace LLC
regarding the application of accounting principles to a specified transaction,
or the type of audit opinion that may be rendered with respect to the
Registrant's financial statements, as well did not consult with Brown Smith
Wallace LLC, as to the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit opinion that might
be rendered on the small business issuer's financial statements and either
written or oral advice was provided that was an important factor considered by
the small business issuer in reaching a decision as to the accounting, auditing
or financial reporting issue.
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ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REPORT
CERTAIN LIABILITIES CLASSIFIED AS EQUITY:
During the course of preparation of financial statements to be included in form
10-QSB as of and for the nine months ended September 30, 2004, management of
American Petroleum Group Inc., a (the "Registrant"), concluded that liabilities
in the amount of approximately $500,000 had been incorrectly included in
"additional paid in capital" in previous filings. The Company had entered into a
stock borrowing arrangement at October 9, 2003 whereby several
stockholder/officers of the Company transferred 1,000,000 shares of common stock
into an escrow account held by counsel. The shares were subsequently sold with
the proceeds of $500,000 being transferred to the company. The Company is
obligated to return the shares to the original holders by April 2005. If the
Company had to repurchase it's stock at the balance sheet dates of December 31,
2003, March 31, 2004 and June 30, 2004, included in past filings it would
require $1,010,000 / $340,000 / $80,000 respectively to acquire the aggregate
shares using a $ 1.01 / $.34 / $.08 /share price in order to replace such shares
for the original contributors of the stock. This re-determination of the amount
to replace the shares was not disclosed in prior reporting periods.
The matter was raised by new management after a `change in control" occurred in
the course of their review of the Company's prior public filings and preparation
of the 10-QSB for September 30, 2004. After discussions among the Company's
management, , Brown Smith Wallace LLC, and the Company's prior auditors, Amisano
Hanson, Chartered Accountants, the Company's management concluded that a
correction of the prior accounting on this matter was required. The Company's
management brought the matter for consideration before the full Board of
Directors of the Company. Having considered the circumstances underlying the
accounting errors and their effects upon the Company's prior filings, and having
discussed the matter with representatives of the audit firms, as well as the
Company's management concluded that the previously issued financial statements
for the periods ended December 31, 2003, March 31, 2004 and June 30, 2004,
should not be relied upon and approved the Company's management to amend certain
previously filed public reports. Therefore, in connection with the foregoing,
the Company's management will shortly amend previously filed Annual Report on
Form 10-K for the fiscal year ended December 31, 2003; and Quarterly Reports on
Forms 10-QSB for quarters ended March 31, 2004 and June 30, 2004.
The correction of this error did not result in a material change to the net loss
to the financial statements contained in any previous filings on form 10-KSB for
the fiscal year ended December 31, 2003 or forms 10QSB. for reporting periods
ended March 31, 2004 and June 30, 2004, but resulted in an increase in reported
liabilities and stockholders' deficit in all reporting periods from December 31,
2003 and going forward. The effect of these errors is detailed, by affected
reporting period, in Exhibit A filed as Exhibit 99.1 hereto.
The Company urges investors not to rely on the financial information included in
the Company's prior public reports for the affected fiscal periods filed
pursuant to the Securities Exchange Act of 1934, as amended, until it restates
such financial information and files the affected public reports with the U.S.
Securities and Exchange Commission. On February 15, 2004, the Company issued a
press release announcing its intent to restate its financial statements as a
result of the erroneous accounting treatment described above. A copy of this
press release is attached as Exhibit 99.2 hereto.
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AUDITORS REPORT ON FINANCIAL STATEMENTS INCLUDED IN FORM 10-KSB FOR THE YEAR
ENDED DECEMBER 31, 2003
The Sarbanes-Oxley Act of 2002 was signed by the President on July 30, 2002. In
what has been characterized as the most far-reaching expansion of the federal
securities laws since their inception, the Act, among other matters,
significantly impacts (1) regulation of the auditing profession, (2) corporate
governance standards for directors, (3) corporate responsibilities of executive
officers, and (4) financial reporting and disclosures. The legislation was
introduced and passed by Congress in record time, thereby creating a number of
issues whose actual implementation will require elaboration by the SEC. Section
103 of the Act authorizes the Public Company Accounting Oversight Board PCAOB to
establish auditing and related professional practice standards to be used by
registered public accounting firms in connection with the preparation and
issuance of audit reports as required by the Act or the rules of the Commission,
or as may be necessary or appropriate in the public interest or for the
protection of investors. Consistent with Section 103 of the Act, PCAOB Rule
3100, Compliance with Auditing and Related Professional Practice Standards,
requires auditors to comply with all applicable auditing and related
professional practice standards established by the PCAOB.
The Public Company Accounting Oversight Board (the "Board" or "PCAOB") has
adopted Auditing Standard No. 1, References in Auditors' Reports to the
Standards of the Public Company Accounting Oversight Board. Auditing Standard
No. 1, References in Auditors' Reports to the Standards of the Public Company
Accounting Oversight Board directs auditors to state that the engagement was
conducted in accordance with "the standards of the Public Company Accounting
Oversight Board whenever the auditor has performed the engagement in accordance
with the Board's standards.
Accordingly, in connection with any engagement performed in accordance with the
auditing and related professional practice standards of the PCAOB, whenever the
auditor is required to make reference in a report to generally accepted auditing
standards, ,the auditor must refer to "the standards of the Public Company
Accounting Oversight Board. Auditing Standard No. 1, References in Auditors'
Reports to the Standards of the Public Company Accounting Oversight Board was
effective for auditors' reports issued or reissued on or after the 10th day
following approval of this auditing standard by the Securities and Exchange
Commission. The Board's rules on interim standards were adopted by the Board on
April 16, 2003, and approved by the Commission on April 25, 2003.
Additionally, the auditors report dated April 27, 2004, on the financial
statements at and for the fiscal year ended December 31, 2003 contained a
reference to the predecessor auditor's report as to the prior fiscal year rather
than having the prior auditor reissue his report on the previous fiscal year,
and including it in the filing of form 10-KSB for that period.
These above items were discovered by new management after a "change in control"
occurred during review of past SEC filings in the preparation of the 10-QSB for
September 30, 2004. They were brought to the attention of the board of
directors, Brown Smith Wallace LLC, and the Company's prior auditors, Amisano
Hanson, Chartered Accountants. Company's management and directors concluded that
the previously issued financial statements contained in form 10-KSB, and when
amended for the above accounting error should be reissued with appropriate
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auditors' reports. The Company's board also agreed to have these changes
included in the amendment to the previously filed public report on form 10-KSB
for December 31, 2003, that is to be filed as result of the accounting error
described above.
SECTION 9 -- FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit 16 Prior auditor's resignation letter (to be filed by
Amendment)
Exhibit 99.1 Effect of restatement for each quarter ended from
December 31, 2003 through June 30, 2004.
Exhibit 99.2 Press Release dated February 15, 2005.
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.
Dated: February 15, 2005
American Petroleum Group, Inc.
By: James W. Zimbler
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James W. Zimbler, President
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