|
Nevada
|
000-30237
|
88-0467241
|
||
|
(State
or other jurisdiction
|
(Commission
File Number)
|
(IRS
Employer
|
||
|
of
Incorporation)
|
Identification
Number)
|
|||
|
6800
Gateway Park Drive
San
Diego, CA 92154
|
||||
|
(Address
of principal executive offices)
|
||||
|
619-575-6800
|
||||
|
(Registrant’s
Telephone Number)
|
|
ITEM
4.02.
|
NONRELIANCE
ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT REPORT
OR
COMPLETED INTERIM REVIEW
|
|
·
|
Our
annual report for the year ended December 31, 2006 filed with the
Securities & Exchange Commission (“SEC”) on April 17,
2007;
|
|
·
|
Our
quarterly report for the period ended March 31, 2007 filed with
the SEC on
May 21, 2007; and
|
|
·
|
Our
quarterly report for the period ended June 30, 2007 filed with
the SEC on
August 22, 2007.
|
|
·
|
The
net loss decreased by $66,690 for the year ended December 31, 2006,
due to
the deletion of amortization expense from the financials. The
accounting for the reverse acquisition was changed to reflect a
recapitalization. Since the Company, as the accounting
acquirer, is deemed to be a shell company, there should be no goodwill
or
other intangible assets recognized in conjunction with this
transaction. Accordingly, we removed the goodwill of $2,411,103
and the customer list of $2,000,726, and the corresponding amortization
of
$66,690, which is the only number affecting the previously reported
net
loss. These changes also resulted in a decrease to additional
paid in capital of $4,400,669, and an increase in earnings per
share.
|
|
·
|
We
reclassified depreciation expense from general and administrative
expense
to cost of sales per SAB11.B. The majority of the deprecation
was due to the purchase of a building in
2006.
|
|
·
|
Other
adjustments, reclassifications and timing adjustments which will
change
the amounts previously reported in the financial statements will
be
identified in an amended Form
10-KSB.
|
|
·
|
The
net loss decreased by $1,943,067 resulting in a restated net loss
of
$924,407 for the quarter due to the
following:
|
|
§
|
Amortization
of customer list was removed as previously stated above,
($100,036).
|
|
§
|
Stock
compensation increased by $2,121,460 due to the issuance of stock
which
had been valued incorrectly; the revalued stock compensation is
based upon
the fair market value at date of issuance resulting in a
reduction to income.
|
|
§
|
The
Company entered into a sale and leaseback transaction during this
quarter
for which revisions were made, the net effect of which resulted
in an
increase to income by $78,357 with changes to depreciation, lease
expense
and gain on sale of assets. This transaction has been accounted
for as an
operating lease per SFAS 13 and 28. The contract has no bargain
element and does not meet the other tests for classifying as a
capital
lease.
|
|
·
|
Other
adjustments, reclassifications and timing adjustments which will
change
the amounts previously reported in the financial statements will
be
identified in an amended Form
10-QSB.
|
|
·
|
The
loss increased by $452,402 resulting in a restated net loss of
$7,243,577
for the quarter due to the
following:
|
|
§
|
Amortization
of customer list was removed as previously stated above, in the
amount of
$100,036.
|
|
§
|
Stock
compensation increased by $646,000 due to the issuance of stock
which had
been valued incorrectly; the revalued stock compensation is based
upon the
fair market value at date of issuance resulting in an increase
to the
loss.
|
|
§
|
The
sale and leaseback transaction which was finalized during this
quarter
reflects changes, the net effect of which resulted in a decrease
to the
loss of $93,562, with changes to depreciation, interest expense,
and gain
on sale of assets.
|
|
·
|
Other
adjustments, reclassifications and timing adjustments which will
change
the amounts previously reported in the financial statements will
be
identified in an amended Form
10-QSB.
|
| Date: November 8, 2007 | Ethos Environmental, Inc. |
|
By:
|
/s/
Enrique de Vilmorin
Enrique
de Vilmorin,
President
& CEO
|