Wismer Martin Accountants Quit Coopers & Lybrand Abruptly Severs Seven-Year Relationship

The accounting firm representing Wismer Martin Inc. abruptly terminated its relationship with the troubled company last week.

Coopers & Lybrand L.L.P. notified Wismer Martin on March 28 that it would no longer serve as the company’s independent accounting firm. The notification came one week after the Spokane software manufacturer’s annual meeting, at which Coopers & Lybrand was formally appointed by a vote of shareholders to continue its seven-year relationship as the company’s accountant.

“We are switching our auditors as part of our need to move forward with our stock offering,” John Perez, Wismer Martin’s president, said Tuesday afternoon. “We are in the process of speaking with a couple of other local firms and expect to have a new set of auditors here shortly.”

Perez said the departure of Coopers & Lybrand was “a mutual decision” reached by the two companies. But a report to the U.S. Securities and Exchange Commission filed by Wismer Martin makes clear that the decision to sever the relationship was made solely by Coopers & Lybrand.

“Neither the board of directors, nor any committee of the board of directors, had considered or even contemplated any decision to change accountants,” Wismer Martin Chief Financial Officer Douglas A. Willford wrote to the SEC.

The 8K report - a document that must be submitted by public companies to the U.S. Securities and Exchange Commission when significant changes occur in the company’s ownership and finances - was received by the SEC Monday.

The report, signed by Willford, said that, “On March 28, Coopers & Lybrand L.L.P. informed (Wismer Martin) that the client-auditor relationship between (Wismer Martin) and their firm had ceased as of that date.”

Coopers & Lybrand has been Wismer Martin’s accountant since June 1988.

The report does not detail why the accounting firm decided so abruptly to resign from its representation of Wismer Martin.

Neither Perez nor Willford would comment on why Coopers & Lybrand severed the relationship. Gordon Budke, managing partner of Coopers & Lybrand’s Spokane office, said Tuesday he could not comment. Representatives in the company’s New York office were not available for comment Tuesday afternoon.

Wismer Martin manufactures software products used in the management of physician practices and health care information networks.

These health care information networks link hospitals, doctors, insurers and other health care providers into a common computer network.

The potential of Wismer Martin’s network product helped boost the company’s stock, which for years traded at around 25 cents, to more than $3 at the end of last year.

But a record $700,000 loss in the quarter ended Dec. 31 and a subsequent management upheaval have sent the stock plummeting. It traded over the counter at 80 cents Tuesday.

After a disagreement with Holden over the acquisition of another Holden company - San Diegobased Integrated Health Systems Inc. - by Wismer Martin last year, longtime company president and CEO Stan Hatch left Wismer Martin in March.

Holden owns about 52 percent of Wismer Martin’s stock. Hatch is the second-largest shareholder with about 10 percent of the stock.

Several other key executives resigned from the company shortly after Hatch’s departure, and some of them questioned the ongoing financial viability of Wismer Martin. They said IHS’s poor performance had drained cash from Wismer Martin and put the Spokane company in peril.

Hatch was replaced as president by Perez, who was previously the chief executive officer of IHS.

At the shareholders’ meeting last month, Holden announced a $2 million stock offering. He said the company has not lost any of its key customers.

He said contract talks with two important clients considering the purchase of major networks remain on track.

Holden also said the company is pursuing the possibility of a strategic alliance with communications giant GTE. And he said the company had enough operating resources to survive until the stock offering is completed.

Perez said changing auditors at this point would present no longterm problems for Wismer Martin.