Attached files
American Capital Holdings
1016 Clemmons Street
Suite 302
Jupiter, FL 33477-3305
561.745.6789 Telephone
561.337.9356 Facsimile
561.262.5158 Cellular
brichmond@achusa.com
rturner@achusa.com
January 2, 2008
Via United States Postal Priority Certified
Mail No. 70022410000543376468
RETURN RECEIPT REQUESTED
Mr. Mark W. Olsen, Chairman
Ms. Angela Desmond, Chief of Staff
Public Company Accounting Oversight Board
1666 K Street NW
Washington, D.C. 20006-2803
Re: Wieseneck & Andres & Company, P.A.
Thomas B. Andres, CPA
Public Company Accounting Oversight Board
PCAOB Release No.1 04-2005-117
Dear Mr. Olsen & Ms. Desmond:
As promised, in furtherance of our facsimile letter to your of December 17, 2007, which
copy is appended hereto as Exhibit No.1, the purpose of this letter is to clarify our
position regarding your board's above described PCAOB Release No. 104-2005-117. For
your convenience, we enclose a copy of your aforementioned PCAOB release as Exhibit
No.2. On Page three (3) of this document, you state in Item (1) that our accounting
"failed to perform adequate audit procedures to test the existence and valuation of
investment and goodwill" and (2) the failure to perform and document adequate audit
procedures to test the existence of a significant portion of the inventory balance and to test
the valuation of the issuer's recorded inventory. We strongly disagree with the PCAOB's
assessments based on the following reasons:
Mr. Mark W. Olsen, Chairman
Ms. Angela Desmond, Chief of Staff
Public Company Accounting Oversight Board
PCAOB Release No.1 04-2005-117
January 2,2008
Page 2 of5
1. Enclosed herewith as Composite Exhibit No.3. is a copy of the executed
December 30, 2003 Stock Asset Acquisition Agreement between Spaulding
Ventures, LLC and American Capital Holdings, Inc., which includes a detailed
spreadsheet of the exchange offer. The acquisition price was based on "actual
audited investment cost" by the Spaulding members in the ten (10) companies
listed within the agreement, subject to the completion of a final audit by
Spaulding's auditor, Timothy R. Foster, CPA, who is also a PCAOB member.
2. Affixed herein as Exhibit No.4, is a copy of Mr. Foster's January 14,2004 Audit,
for the period ending December 31, 2003, which was conducted in accordance
with U.S. General Accepted Accounting Standards. Mr. Foster listed the Partners
Capital at Ten Million Eight Hundred Seventy Four Thousand Nine Hundred
Ninety Nine & 65IHundreds ($10,874,999.65) U.S. Dollars. This is the exact
number we recorded on American Capital Holdings, Inc's General Ledger. We
completed the exchange offer in late February, 2004. Spaulding had made venture
capital investments .nto these companies, which were all private companies. Even
as of today some 0 these companies have some very possible upside potential. In
our opinion, if ACH would have booked this transaction at below the "audited cost
value", we would htve breached our fiduciary duty to ACH's shareholders.
3. Based on the agreed on actual "cost audit", each and every Spaulding member
agreed to exchange their membership units into ACH stock. Enclosed herewith as
Composite Exhibit No.5 are copies of each of the five (5) page agreements,
which included Full Unconditional General Releases for each Spaulding exchange
participant.
4. Affixed herewith as Composite Exhibit No.6 is a copy of American Capital
Holdings, Inc. ("ACH") 2004 10KSB filing, which includes the May 31, 2004
ACH audit. Part of American Capital Holdings, Inc's May 31, 2004 audit was
based on Mr. Foster's January 14,2004 audit opinion. During the next twelve (12)
months ACH's management went into great detail in assessing the ten (10)
companies listed in the December 30, 2003 agreement. Smart Pill Diagnostic's
held great promise compared to another fully reporting trading public company in
the same medical field known as Givens Imaging, who had similar technology and
had a Three Hundred Million ($300,000,000) plus market capitalization. At the
time, we held close to twenty (20%) percent of Smart Pill. The other companies
were private and were hard to assess a value to them.
5. In spite of Smart Pill Diagnostic's promising future and because the other
companies were private and were hard to assess a true market value, the
management of American Capital Holdings, Inc. chose to write off the entire
Mr. Mark W. Olsen, Chairman
Ms. Angela Desmond, Chief of Staff
Public Company Accounting Oversight Board
PCAOB Release No. 104-2005-117
January 2, 2008
Page 3 of5
Spaulding investment until a later time when and if we sold some of the
investments into these companies. Enclosed herein as Composite Exhibit No.7 is
a copy of American Capital Holdings, Inc's Form 10KSB/A for the period ending
May 31, 2005 which the audit reflects the aforementioned write down.
6. One of the investments American Capital Holdings, Inc. held and still holds today
is in a public trading company known as Air Media Now, Inc. This investment
was valued at the trading price on the same day of each audit period of May 31,
2004 and May 31, 2005. Air Media is a fully reporting trading public company in
the process of acquiring an Insurance Carrier and plans to be renamed. American
Capital still owns 100% of IS Direct Agency, Inc., which will be the captive
agency for our Insurance Carrier operations.
7. It was brought to our attention lour board had questioned the value placed on the
inventory. Appended herein as ~xhibit No.8, is a copy of the itemized inventory,
which was based on the cost method, This inventory was purchased over time by
the prior Chairman of eCom eCom.com, David Panaia. On November 30, 2003
eCom purchased the above inventory from David Panaia for $32,000. The
inventory was spun-off to the eCom eCom.com, Inc. subsidiary A Super
Deal. com, Inc. on June 4, 2004. A complete valuation of the above inventory
amounts to Fifty Two Thousand Nine Hundred Sixty Six ($52,966) U.S. Dollars.
8. American Capital Holdings, Inc. was a one (1) of three (3) petitioning creditors
and Plan Proponent sponsor in a recent United States Southern District of Florida
Bankruptcy Plan of Reorganization regarding a company known as
eComeCom.com, Inc., in re: Case No. 04-35435 BKC-SHF. The Involuntary
Petition was filed on November 29,2004. Throughout the three (3) years of these
proceedings, we worked very closely with your agency, the United States
Securities & Exchange Cormnission ("SEC"), regarding eCom's Plan of
Reorganization, Disclosure Statement and the completion of the spin off of
eCom's former wholly owned ten (10) fully reporting public company
subsidiaries. The result of the ballots were: (a) eCom received 100% acceptance
votes from the Class I creditors, who received 100% of their respective claims; (b)
100% acceptance votes for the Class II unsecured creditors who also received
100% of their entire claims; (c) 100% acceptance from the equity security holders
who kept their entire shareholders under the Plan of Reorganization. For your
review, we are enclosing as Composite Exhibit No.9 is a copy of the Plan of
Reorganization & Disclosure Statement. Appended as Exhibit No. 10 is a copy of
the March 12,2007 Court Transcript. When you review, you will see Mr. Gordon
Robinson, Esq., who is your agency's chief bankruptcy counsel who worked with
us throughout this case, who appeared on behalf of the SEC and was publicly
Mr. Mark W. Olsen, Chairman
Ms. Angela Desmond, Chief of Staff
Public Company Accounting Oversight Board
PCAOB Release No. 104-2005-117
January 2, 2008
Page 4 of5
supportive of our plan. When you review the transcript, you will see Mr.
Robinson also was complementary about our disclosure and filings with the SEC.
Thomas B. Andres, CPA and Wieseneck & Andres, P.A. was approved by the
United States Bankruptcy Court via a Court Order and was responsible for the
financial disclosure of these filings. Additionally, the United States Department of
Justice U.S. Trustee's office was also supportive. A Court Order was entered by
the Honorable Judge Stephen H. Friedman on March 23, 2007 approving eCom's
Plan of Reorganization & Disclosure Statement, which copy is affixed herein as
Exhibit No. 11.
In light of the fact that: (a) ACH knew we had enough votes to complete a
successful eCom Plan of Reorganization; (b) ACH became in early 2005, the
majority and controlling shareholder (approximately 96%) of the ten (10) SEC
fully reporting public companies; and (c) knowing we would be able to capture
eCom's $7,300,000 Carry Forward Tax Loss, ACH never assigned any value to its
balance sheet during or after the conclusion of these proceedings. Today, fully
reporting public companies sell for a significant amount of money. Being we just
last month finished up with all the final Orders regarding professional fees and
final restructuring charges etc., our plans are to acquire profitable private
companies.
Under the Sarbanes-Oxley Act, which was the legislation which created your Public
Accounting Oversight Board, we are required to sign off under the criminal penalties of
perjury declaration. To this day, we stand behind in our belief what was stated in all of
our financial statements was accurate, conservative in nature and was accomplished
within all General Accepted Accounting Standards and Sarbanes-Oxley guidelines.
In closing, we reiterate American Capital Holdings, Inc' s and all of the companies
management's representations to our accounting firm, Wieseneck & Andres, P.A., have
been absolutely accurate, conservative and we have taken all the correct appropriate steps
in the classification of our assets. Wieseneck & Andres has always been extremely
thorough in each and every audit review and without reservation, we stand behind their
audits. It is our strong opinion that any disciplinary actions taken by the PCAOB against
Mr. Andres and his firm would be very wrong and without merit. This accounting firm is
absolutely vital for all of these companies' future and any actions taken by your board
would hurt approximately six thousand (6,000) shareholders in each of these companies.
It is hard for us to figure out when all of our court disclosures were included are hundreds
of SEC filings which were approved by the United States Bankruptcy Court, the SEe
(which is what your board is part of), the Department of Justice United States Trustee's
Office, 100% approval from all of the creditors and 100% approval of all the equity
Mr. Mark W. Olsen, Chairman
Ms. Angela Desmond, Chief of Staff
Public Company Accounting Oversight Board
PCAOB Release No. 104-2005-117
January 2,2008
Page 5 of 5
security holders (who kept their entire equity holdings) that for some reason your board
thinks we did something incorrect. We obtained court order after court order during the
entire three (3) year process and each and every filing was posted to the eCom's website
per another court approved order allowing us to do so. In fact, now that we have this
massive restructuring behind us, when we start monetizing these assets, we believe history
will prove we were over conservative and the future probably will result in many future
recapture events and capital gain transactions.
In advance, we sincerely appreciate your giving us the opportunity to fairly present the
facts regarding this issue. One last request, it would be appreciated prior to your board
taking any type of disciplinary action, we would appreciate a meeting with your staff as
we can bring volumes of additional documents in full support of what we have stated
within this correspondence. Notwithstanding, hopefully this outcome of this letter and
exhibits have addressed your concerns. With kindest regards, we remain.
Most sincerely,
American Capital Holdings, Inc.
/s/ Barney A. Richmond
Barney A. Richmond, Chairman
/s/ Richard C. Turner
Richard C. Turner, Chief Financial Officer
cc: Thomas B. Andres, CPA
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