This excerpt taken from the RCNI 10-K filed May 11, 2005.
To the Shareholders and Board of Directors of RCN Corporation
In our opinion, the consolidated balance sheet as of December 31, 2003 and the related consolidated statements of operations, shareholders equity / (deficit) and of cash flows for each of the two years in the period ended December 31, 2003 listed in the accompanying index, present fairly, in all material respects, the financial position, results of operations and cash flows of RCN Corporation (Predecessor Company) at December 31, 2003 and for each of the two years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index for the years ending December 31, 2003 and 2002 present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Companys management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
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 financial statements, at December 31, 2003, the Company has a working capital deficiency, a net capital deficiency and has incurred recurring losses from operations and net cash outflows from operations. At December 31, 2003, the Company will not have sufficient cash to meet its anticipated cash needs for working capital, capital expenditures, contractual debt maturities, cash interest payments and other activities for the next twelve months without successfully restructuring its balance sheet. Furthermore, the Company has not made recent interest payments on certain of its Senior Notes and is in default of its debt agreements. These matters raise significant doubt about the Companys ability to continue as a going concern. Managements plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Florham Park, NJ
March 25, 2004