Apparently theire was an audit of Trucept just before it went under.. probably because if IRS issues, not because they were making any money.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Trucept, Inc.
We have audited the accompanying consolidated balance sheets of Trucept, Inc. (the Company, formerly Smart-Tek Solutions, Inc.) as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Trucept, Inc. as of December 31, 2012 and 2011, and the results of its operations, and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has sustained recurring losses from operations and has an accumulated deficit of approximately $22 million at December 31, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome from this uncertainty.
As of December 31, 2012, the Company had an obligation for $16.7 million in delinquent payroll taxes and $2.4 million in accrued penalties. These amounts are due to the U.S. Treasury and represent collection of employment taxes from its PEO employees. The Company is in discussions to reach a payment plan with the Internal Revenue Service (IRS) regarding these amounts due. The U. S. Treasury and IRS will have a priority claim on all accounts of the Company until this is resolved.
PMB Helin Donovan, LLP
/s/ PMB Helin Donovan, LLP
April 15, 2013 Dallas, Texas
Liquidity and Going Concern
At December 31, 2012, the Company had cash and cash equivalents of $546,057, a working capital deficit of approximately $19.9 million and an accumulated deficit of approximately $22.1 million. As of December 31, 2012, the Company had an obligation for $17.6 million in delinquent payroll taxes plus $1.4 million in accrued penalties. These amounts are due to the US Treasury and represent collection of employment taxes from its PEO employees. The U.S. Treasury and Internal Revenue Services (IRS) will have a priority interest in all assets of the Company.
The Company incurred a net operating loss of approximately $7.85 million for the year ended December 31, 2012. Because of these conditions, the Company will require additional working capital to continue operations and develop its business. The Company intends to raise additional working capital either through private placements, public offerings and/or bank financing, and continues to strive to increase its revenues each year. As a result of the outstanding obligation to the U.S. Treasury it is doubtful the Company can obtain third party financing.
There are no assurances that the Company will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain additional financing through private placements, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations or execute its business plan.
