UNITED STATES
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
DECEMBER 20, 2006
(Date of Report)
ACL SEMICONDUCTORS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-50140 16-1642709
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
B24-B27,1/F., BLOCK B, PROFICIENT INDUSTRIAL CENTRE,
6 WANG KWUN ROAD, KOWLOON, HONG KONG
(Address of principal executive offices)
011-852-2799-1996
(Registrant's telephone number, including area code)
(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 obligations 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
240.14a-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 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 4.01. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) Termination of previous independent public accountants:
(1) On December 19, 2006, Stonefield Josephson, Inc. ("SJI") was
dismissed as the Registrant's independent auditors.
(2) SJI submitted an audit report on April 12, 2006 (except for Note 13
for which the date was April 13, 2006) on the Registrant's financial statements
for the years ended December 31, 2005 and December 31, 2004. The submitted audit
reports contained no adverse opinion, disclaimer of opinion, modification or
qualification.
(3) The removal of SJI was unanimously approved by the Board of
Directors of the Registrant on December 19, 2006.
(4) During the interim period ended September 30, 2006, SJI and the
Registrant had a disagreement regarding applicability of FIN 46 issued by the
U.S. Financial Accounting Standards Board. If the disagreement had not been
resolved to the satisfaction of SJI, it would have made a reference to the
subject matter of the disagreement in connection with its report. The Registrant
was a party to two cross corporate guarantees with variable interest involving
Classic Electronics Ltd. ("Classic"). SJI had requested consolidation of the
results of Classic for the period February 21, 2006 to September 30, 2006 and
de-consolidation of such results for the year ending December 31, 2006. The
Registrant had disagreed with SJI and believed that a consolidation of the
Registrant and Classic was not required under FIN 46 because such cross
corporate guarantees were: (a) temporary in nature and released at the date of
issue of this report, (b) had no adverse implication or expected impact on the
financial position of the Registrant as the cross-guarantees given by the
Registrant were fully secured by collateral provided by Classic, and (c) did not
crystallize any gain or loss on the Registrant. Further, the Registrant believed
that the benefits of adoption of FIN 46 accounting policy cannot outweigh the
costs. Since the Registrant had abandoned the strategic initiative to acquire
Classic for the foreseeable future, the temporary consolidation of the results
of operations and financial position of Classic will effectively make the
Registrant's financial statements incomparable to its past and future filings.
It will not make the Registrant's financial statements present more fairly its
financial position, results of operation and cash flows for the 9-month period
then ended.
The board of directors of the Registrant discussed the inapplicability
of FIN 46 with SJI. The Registrant has authorized SJI to respond fully to the
inquiries of Jeffrey Tsang & Co. ("JTC"), the accountant who has succeeded SJI
concerning the inapplicability of FIN 46.
(5) Pursuant to Item 304(a)(3) of Regulation S-K, the Registrant has
provided SJI with a copy of this Form 8-K. The Registrant has requested SJI to
furnish a letter addressed to the Commission stating that it agrees with the
above statements and, if not, stating the respects in which it does not agree.
The Registrant has requested SJI to provide the letter as promptly as possible
so that the Registrant can file the letter with the Commission within 10
business days after the filing of this report. Upon receipt of such letter, the
Registrant shall file such letter as an amendment to this Form 8-K as Exhibit
16.1, which will be filed with the Commission within two (2) business days of
the receipt of such letter.
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(b) Appointment of Independent Auditors:
(1) On December 19, 2006, the Registrant's Board of Directors
unanimously approved the engagement of JTC, as its auditors. The Registrant
authorized SJI to fully respond to any and all inquiries of JTC, concerning the
finances and previously performed audits of the Registrant.
(2) During the two most recent fiscal years prior to the date of
engagement, and the subsequent interim period prior to engaging JTC, neither the
Registrant (nor someone on the Registrant's behalf) consulted the newly engaged
accountant regarding any matter, except as set forth below:
The Registrant consulted JTC regarding the applicability of FIN 46 in connection
with the matters referenced herein. The advice provided by JTC was an important
factor considered by the Registrant in reaching a decision as to the reporting
issue.
The Registrant consulted JTC about the applicability of FIN 46 in connection
with two cross corporate guarantees with variable interest involving Classic. In
its letter dated December 19, 2006, filed as Exhibit 16.2 to this report, JTC
had expressed the view that that a consolidation of the Registrant and Classic
was not required under FIN 46 because such cross corporate guarantees were: (a)
temporary in nature and released at the date of issue of this report, (b) had no
adverse implication or expected impact on the financial position of the
Registrant as the cross-guarantees given by the Registrant were fully secured by
collateral provided by Classic, and (c) did not crystallize any gain or loss on
the Registrant. The benefits of adoption of FIN 46 accounting policy cannot
outweigh the costs. Since the Registrant had abandoned the strategic initiative
to acquire Classic for the foreseeable future, the temporary consolidation of
the results and financial position of Classic will effectively make the
Registrant's financial statements incomparable to its past and future filings.
It will not make the Registrant's financial statements present more fairly its
financial position, results of operation and cash flows for the 9-month period
then ended.
The Registrant had consulted SJI about the applicability of FIN 46 in connection
with Classic. SJI had requested consolidation of the results of Classic for the
period February 21, 2006 to September 30, 2006 and de-consolidation of such
results for the year ending December 31, 2006.
(3) The Registrant permitted JTC to review this Form 8-K before it was
filed. The Registrant has provided JTC with an opportunity to furnish the
Registrant with a letter addressed to the Commission containing any new
information, clarification, of the Registrant's views or the respects in which
it does not agree with the statements made in response to this disclosure. JTC
has not furnished the Registrant with a clarification or disagreement with the
information set forth herein, other than the letter dated December 19, 2006,
filed as Exhibit 16.2 to this report.
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) None.
(b) None.
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(c) Exhibits.
Exhibit 16.1 Letter from Stonefield Josephson, Inc.*
Exhibit 16.2 Letter from Jeffrey Tsang & Co. dated
December 19, 2006 to the Registrant
* To be filed by amendment.
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SIGNATURE
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: DECEMBER 20, 2006
ACL SEMICONDUCTORS INC.
By: /s/ Chung-Lun Yang
---------------------------------
Name: Chung-Lun Yang
Title: Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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16.1 Letter from Stonefield Josephson, Inc.*
16.2 Letter from Jeffrey Tsang & Co. dated December 19, 2006 to the
Registrant
* To be filed by amendment.
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