UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): March 7, 2003
ENDOCARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-27212 33-0618093
(Commission File Number) (IRS Employer Identification No.)
201 TECHNOLOGY DRIVE, IRVINE, CALIFORNIA 92618
(Address of principal executive offices, including zip code)
(949) 450-5400
(Registrant's telephone number, including area code)
ITEM 4. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
DISMISSAL OF KPMG.
KPMG, LLP ("KPMG") previously served as the accountants of Endocare, Inc. (the
"Company"). The Company's Board of Directors, upon recommendation of the Audit
Committee, approved the dismissal of KPMG as the Company's independent auditor,
effective March 7, 2003.
KPMG's report on the Company's consolidated financial statements as of and for
the fiscal years ended December 31, 2000 and 2001 did not contain an adverse
opinion or a disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles.
As previously reported by the Company in a press release dated December 12,
2002, KPMG notified the Company's Audit Committee, by letter dated December 11,
2002 (the "KPMG Letter"), that KPMG's report dated February 19, 2002, except as
to notes 1 and 15, which are dated as of March 25, 2002, on the Company's
consolidated financial statements as of December 31, 2001, and for the year then
ended (the "2001 KPMG Report"), had been withdrawn and can no longer be relied
upon. KPMG also advised the Audit Committee they believed that sufficient
evidence exists to conclude that the Company's consolidated financial statements
for the quarters ended March 31, 2002 and June 30, 2002 should not be relied
upon. KPMG stated that it was unable to rely on the representations of the
Company's senior management and would continue to act as the Company's
independent auditor only if those concerns were satisfactorily resolved.
DISAGREEMENT WITH KPMG.
What follows is a description of the one disagreement with KPMG during the
Company's two most recent fiscal years and the subsequent interim period through
March 7, 2003 on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of KPMG would have caused KMPG to make a reference
to the subject matter of the disagreement in connection with its report on the
Company's consolidated financial statements.
The Company's Audit Committee has discussed the subject matter of the
disagreement with KPMG. In addition, the Company has authorized KPMG to respond
fully to the inquiries of the successor auditor concerning the subject matter of
the disagreement.
KPMG has concluded that it is unable to rely on the representations of the
Company's management. KPMG's decision was based on the following transactions
and corresponding accounting principles: (i) revenue recognition issues relating
to sales to customers of the Company's Cryocare surgical system; and (ii) the
timing of the recording of certain expense items and recognition of certain
accounts receivables.
The Company's Audit Committee has investigated these matters and disagrees with
KPMG's conclusion that it could not rely on the representations made by
management. In addition, based on that investigation, the Audit Committee
concluded there had been no fraud or intentional wrongdoing by the Company's
management. The Company's Audit Committee has determined that it is in the best
interests of the Company and its stockholders to dismiss KPMG and seek new
independent accountants.
REPORTABLE EVENTS.
Other than as described above, there have been no "reportable events" (as that
term is used in Item 304(a)(1)(v) of Regulation S-K) during the Company's two
most recent fiscal years and the subsequent interim period.
LETTER FROM KPMG.
The Company has requested that KPMG furnish a letter addressed to the Securities
and Exchange Commission stating whether or not KPMG agrees with the above
statements. A copy of such letter has been filed by the Company as an exhibit to
this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
16.1 Letter from KPMG LLP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
ENDOCARE, INC.
By: /s/ Katherine Greenberg
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Date: March 14, 2003 Katherine Greenberg
Chief Financial Officer