SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 14, 2003
AVIATION GENERAL, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24795 73-1547645
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
7200 NW 63rd Street
Bethany, Oklahoma 73008
(Address of principal executive offices, including zip code)
(405) 495-8080
(Registrant's telephone number, including area code)
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Item 4. Changes in Registrant's Certifying Accountant
On February 14, 2003, Grant Thornton LLP ("Grant Thornton") resigned as
independent auditors of Aviation General, Incorporated (the "Registrant"). Grant
Thornton advised the Registrant that the reason for its resignation was that it
had determined that in light of the Registrant's financial condition and size,
the Registrant does not meet Grant Thornton's current criteria for
public-company audit clients.
The reports of Grant Thornton as of and for the fiscal years ended
December 31, 2001 and 2000 did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles, except that the report on the Registrant's 2001 financial
statements contained an explanatory paragraph describing an uncertainty about
the Registrant's ability to continue as a going concern. During the two fiscal
years ended December 31, 2001, and during the subsequent interim periods prior
to February 14, 2003, there were no (i) disagreements between Grant Thornton 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 Grant Thornton, would have caused it to make
a reference to the subject matter of the disagreement in connection with its
reports on the Registrant's financial statements, or (ii) events as described in
Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934,
as amended, except as described below.
On February 21, 2003, the Registrant filed a report on Form 8-K
disclosing the resignation of Grant Thornton, and on March 7, 2003 the
Registrant filed an amendment to the report on Form 8-K. The March 7 amendment
included as an exhibit a letter from Grant Thornton dated March 5, 2003. The
Registrant is further amending the report on Form 8-K to include under this Item
4 the following language, which was contained in Grant Thornton's March 5 letter
previously filed as an exhibit. References to "we" and "us" in this excerpt from
Grant Thornton's letter refer to Grant Thornton.
"On January 10, 2003, the Registrant filed a Form 10-QSB/A for the period
ended June 30, 2002, in which the Registrant reported that:
During the preparation of the third quarter 2002 financial statements,
management identified certain excess capacity costs of approximately
$662,000 which were capitalized as work in process inventories as of
June 30, 2002. Management believes these costs were incurred primarily
as a result of the reduced manufacturing environment and should have
been expensed during the second quarter 2002.
Management reported this improper capitalization to us in November 2002. By
way of a letter dated February 14, 2003 (Internal Control Communication),
we notified the Registrant's Management and Audit Committee of certain
matters involving internal control and its operation that we considered to
be reportable conditions under standards established by the American
Institute of Certified Public Accountants. More particularly, we informed
them that "...the reportable condition relating to `work in process
inventory [that] included significant excess capacity costs that should
have been expensed as incurred,'" in our view, constituted "a material
weakness...." We also noted in our Internal Control Communication that:
We have been informed that management took appropriate remedial actions
to amend the second quarter interim financial statements and
implemented additional controls to provide reasonable assurance that
excess capacity costs are expensed and not capitalized as work in
process inventory.
Separately, and in addition to the matter involving the capitalization of
excess capacity costs, we also pointed out in our February 14, 2003
Internal Control Communication that the Registrant's "...current principal
financial officer and existing accounting department staff may lack the
requisite expertise needed for assessing and applying new and non-routine
accounting principles and for preparing required financial and SEC
reporting disclosures" and made recommendations for improvement."
The Registrant furnished Grant Thornton with a copy of this amendment
to its report and requested it to furnish the Registrant with a letter addressed
to the Commission stating whether it agrees with the statements made by the
Registrant in response to Item 304(a) of Regulation S-K and, if not, stating the
respects in which it does not agree. A copy of Grant Thornton's letter is filed
as Exhibit 16 to this amendment to Form 8-K.
Item 7. Financial Statements and Exhibits
(c) Exhibits. The following exhibits are filed with this report:
16 Letter from Grant Thornton regarding the change in the
Registrant's certifying accountant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVIATION GENERAL, INCORPORATED
/s/ WIRT D. WALKER, III
------------------------------------
Name: Wirt D. Walker, III
Title: Chairman and Chief Executive Officer
Dated: April 17, 2003