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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
Date of Report (Date of Earliest Event Reported): October 18, 1996
NOVATEK INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO
(State or Other Jurisdiction of Incorporation)
0-22096 84-1074891
(Commission File No.) (I.R.S. Employer Identification No.)
8990-H Oakland Center, Route 108, Columbia, Maryland 12045
(Address of Principal Executive Offices) (Zip Code)
(410) 964-2457
(Registrant's Telephone Number, Including Area Code)
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ITEM 4(a). CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Effective October 18, 1996, Ahearn, Jasco + Company, P.A., ("AJC") 190 Southeast
19th Avenue, Pompano Beach, Florida 33060, resigned as the certifying accountant
for Novatek International, Inc. (the "Company"). AJC's resignation resulted from
certain procedures, performed by AJC on October 17, 1996 at the direction of the
sole director-member of the Board's audit committee, to verify statements made
in a certain press release issued by the Company on September 26, 1996 and
representations made to AJC by a principal shareholder of the Company in
connection with such press release. AJC indicated in an October 18, 1996 letter
that "the results of the verification procedures yesterday have led us to
conclude that the material representation made by this significant shareholder
regarding this press release is untrue." As a result, AJC "formed the
professional conclusion that we can no longer rely on assertions and
representations made by this shareholder, and since this shareholder is a person
who has significant control and influence over the operations and management of
the Company, we can no longer serve as auditors for Novatek International, Inc."
The shareholder has denied any misrepresentation was made to AJC. AJC also
encouraged the directors of the Company to continue to take certain remedial
steps based on the auditor's verification procedures. Management has taken such
remedial procedures and has issued a press release regarding the September 26,
1996 release. (See Item 5 below)
AJC was engaged by the Company on June 29, 1996. AJC was formerly engaged by
Medical Products, Inc. which was acquired by Novatek International Holdings,
Inc., a wholly-owned subsidiary of the Company. (See Form 8-K Current Report
dated June 19, 1996) AJC has not issued any reports or auditor's opinions on any
financial statements of the Company. During AJC's engagement, AJC notified
management of its determination that the accounting for the merger between
Novatek International Holdings, Inc. and Medical Products, Inc. was incorrect.
The Company has agreed with such analysis and is in the process of preparing an
amendment to the Company's Form 8-K Current Report filed in connection with the
merger. (See Item 5 below) AJC also issued an interim reportable conditions
letter (following generally accepted auditing standards for such reports) to the
Company's Board of Directors on September 30, 1996; this letter was to draw the
Board's attention to significant deficiencies in the Company's internal control
which AJC believed could adversely affect the Company's ability to develop
reliable financial statements. Other than the items described above, the Company
had no other reportable events (as specified in Item 304(a)(1)(v) of Regulation
S-K) with AJC as to any matter of accounting principles or practices, financial
statements, disclosure or auditing scope or procedure.
ITEM 5. OTHER EVENTS.
On October 18, 1996, the Company issued a press release relating to a change in
the accounting treatment of the merger of the Company's wholly-owned subisidary,
Novatek International Holdings, Inc. and Medical Products, Inc. A copy of the
press release is attached as Exhibit 2 hereto.
On October 21, 1996, the Company issued a press release to address certain
inaccuracies in a press release issued on September 26, 1996. A copy of the
press release is attached as Exhibit 3 hereto.
On October 22, 1996, Dr. Gaston Oxman resigned as a director and President of
the Company for reported serious health problems.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
None
(b) Pro Forma Financial Information.
None
(c) Exhibits.
1. Letter regarding change in certifying accountant.
2. Press release dated October 18, 1996.
3. Press release dated October 21, 1996.
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SIGNATURES
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.
Date: ____________________ NOVATEK INTERNATIONAL, INC.
By: _________________________________
Anthony K. Sebro, Secretary,
Treasurer
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EXHIBIT 1
October 25, 1996
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Gentlemen:
We have read and agree with the comments in Item 4(a) of Form 8-K of Novatek
International, Inc. (Commission File Number 0-22096), with a date of earliest
event reported of October 18, 1996, which was furnished to us on October 24,
1996.
We were formally engaged by Novatek International, Inc. (the "Company") as its
independent accountants on June 29, 1996. We resigned as the independent
accountants on October 18, 1996, and notified management in writing of our
reasons on that date. We have not issued any reports or auditors' opinions on
any financial statements of the Company.
In accordance with item 304(a)(1)(v) of Regulation S-K, which requires
certain reportable events to be disclosed, we hereby report the following:
Reportable events involving our engagement with the registrant includes (1)
our questioning the accuracy of three of the registrant's filings with the
SEC as a result of incorrectly accounting for the merger between the
Company and Medical Products, Inc.; (2) adequacy of the Company's internal
controls; and (3) our inability to rely on management's representations. We
believe that the comments in Item 4(a) of Form 8-K adequately address our
concerns, except as to the need for amended Form 10-Q filings.
With respect to the accuracy of three of the registrant's filings with the
SEC, we have concluded that this incorrect merger accounting has caused the
Company's Form 8-K/A dated April 2, 1996, Form 10-Q for the quarter ended
March 31, 1996, and Form 10-Q for the quarter ended June 30, 1996 to need
to be amended to correct the proforma financial statements and quarterly
financial statements, respectively. Management has indicated that these
filings will be amended. However, as of the date of our resignation, such
amended filings have not been made.
AHEARN, JASCO & COMPANY, P.A.
Pompano Beach, Florida
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EXHIBIT 2
FOR IMMEDIATE RELEASE: COMPANY CONTACT:
Anthony Sebro, CFO
301-596-0678
NOVATEK INTERNATIONAL TO FILE AMENDED
QUARTERLY REPORTS WITH SEC
Columbia, Maryland, October 18, 1996; NOVATEK INTERNATIONAL, INC. (NASDAQ:NVTK)
announced today that on March 5, 1996, a merger was effected between Medical
Products Inc. (MPI) and Novatek International Inc. An accounting analysis of the
transaction was recently completed, and management now believes that the merger
was originally accounted for incorrectly. Management attributes this error to
the complexity of the transaction, as well as to the complexity of accounting
rules governing such mergers. Accounting procedures require that although
Novatek is the surviving corporation, MPI is the acquirer for accounting
purposes, because the former MPI stockholders received the larger portion of the
common stockholder interests and voting rights than those retained by the
pre-merger Novatek stockholders. This type of merger should have been
characterized as a reverse acquisition.
As a result of this accounting treatment, the assets and liabilities of Novatek
acquired in the transaction will be recorded by MPI at their fair values as of
March 5, 1996. MPI will be recapitalized for accounting purposes to reflect the
authorized stock of the surviving entity. Because management intends to dispose
of the construction business operated by pre-merger Novatek, goodwill recorded
as a result of the new accounting will most likely be written off as of the
merger date. Management estimates that this write-off could be as high as $30
million.
Novatek has engaged an accounting firm to assist management in completing this
analysis, and to advise on the necessary adjustments to its books and records.
In light of this, Novatek's reporting of the merger on Sec Form 8-K, as well as
its March 31, 1996 and June 30, 1996 quarter reports on Form 10-QSB, will need
to be amended. Management believes that the accounting will be corrected so that
the September 30, 1996 Financial Report and Form 10-QSB, will reflect the new,
corrected account treatment.
We expect the corrected SEC reports as well as the September 30, 1996 report
will be made public on or before November 14, 1996.
The company also announced that it will issue shortly a comprehensive response
to the errors and allegations made by and printed in the October 14, 1996
article that appeared in Barrons.
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EXHIBIT 3
FOR IMMEDIATE RELEASE: COMPANY CONTACT:
Anthony Sebro, CFO
301-596-0678
NOVATEK INTERNATIONAL CORRECTS DR. PUCCIO'S INVOLVEMENT
IN SEPTEMBER 26th PRESS RELEASE
Columbia, Maryland, October 21, 1996; NOVATEK INTERNATIONAL, INC. (NASDAQ:NVTK)
announces certain corrections and update to the press release issued on
September 26, 1996. Dr. Jaime Puccio, Chairman of the Board of Directors of the
Company, was not involved in the announcement, any negotiations, or any
participation in the sale or purchase of certain shares of the Company's common
stock owned by Pickeral Cove Trust, New England Diagnostics, Ltd. and/or
Rudolphe Balboun. Mr. Puccio has confirmed meeting with Mr. Perez and Mr.
Buchmuller, the reported general partners of the purchaser of these shares, in
Argentina to discuss a business transaction on behalf of the Company unrelated
to purchase or sale of shares.
A Company officer was made aware by Pickeral Cove Trust and New England
Diagnostics of a stock sale transaction concerning them prior to the September,
1996 release. At this time, however, the Company has received no further word
regarding the sale of shares from either Pickeral Cove Trust, New England
Diagnostics, Ltd. or Rodolphe Balboun.
No shares of the Company were voted by any partnership of Mr. Perez or Mr.
Buchmuller at the September 30, 1996 shareholders meeting.
FOR FURTHER INFORMATION CONTACT:
FMMG, INC.
561-487-2622
561-852-4561 FAX
