UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) August 5, 1996
CHANTAL SKIN CARE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-25115 75-2340624
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
12121 Wilshire Boulevard, Los Angeles, California 90025
(Address of prinicpal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 207-1950
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Item 4. Changes in Registrant's Certifying Accountant
On August 5, 1996, Coopers & Lybrand L.L.P. notified the registrant that it
was resigning as the registrant's independent accountant with respect to the
audit of the Company's June 30, 1996 financial statements, but will release
its report on the audit of the June 30, 1995 financial statements of the
registrant upon meeting certain conditions. Coopers & Lybrand will not
complete the separate engagement requested by the registrant's parent with
respect to the shipments, orders and returns of the registrant's distributor.
In the registrant's first quarter ended September 30, 1995, $10,543,637 of
product was shipped to the registrant's distributor and was originally recorded
as revenue. The registrant, during the second fiscal quarter ended December 31,
1995, took back a portion of the products previously shipped to the distributor
to redo uniform product code labeling, and reshipped. In consideration and
accommodation to the registrant's distributor for the redoing of uniform product
code labeling, the distributor's payment terms for subject products was
extended. Coopers & Lybrand advised the registrant that according to generally
accepted accounting principles these events made it necessary to offset the
original shipment as if products were returned in the first quarter. The
registrant's financial statements for the three months ended, September 30, 1995
are expected to reflect this accounting treatment. The registrant advised
Coopers & Lybrand that it disagreed with the accounting treatment recommended
by Coopers & Lybrand.
In addition, the registrant, in February 1996, sought the advice of Coopers &
Lybrand as to whether its then existing revenue recognition policy was in
compliance with generally accepted accounting principles, with respect to
recognizing second quarter auto ship sales to its distributor. To date, Coopers
& Lybrand have not yet completed the procedures they require in order to render
such advice, and no final advice has been rendered to date on the autoship
accounting issue by Coopers & Lybrand. As the registrant sought the advice of
Coopers & Lybrand at the outset of the autoship accounting treatment question
having arisen, and as the registrant would have followed the advice it received
from Coopers & Lybrand, the registrant does not deem the discussions with
Coopers & Lybrand on the autoship subject as a "disagreement"; Coopers & Lybrand
has informed the registrant that it does consider these discussions as a
"disagreement" within the Form 8-K requirements.
With respect to the issues referred to above, the officers and directors
discussed the subject matter of each of the accounting issues with Coopers &
Lybrand. In addition, the registrant has authorized Coopers & Lybrand to respond
fully to the inquiries of the accounting firm to be engaged to report on the
financial statements of the registrant for the fiscal year ended June 30, 1996.
The report of Coopers & Lybrand on the registrant's financial statement as of
and for the year ended June 30, 1994 contains an explanatory paragraph with
respect to the registrant's ability to continue as a going
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concern. No such explanatory paragraph is expected to be included in the report
on the June 30, 1995 financial statements. Except for the foregoing, Coopers &
Lybrand's report on the financial statements as of and for the year ended June
30, 1994 did not, and the report on the financial statements as of and for the
year ended June 30, 1995 is not expected to, contain an adverse opinion or a
disclaimer of opinion, nor was it with respect to the 1994 financial statements
nor is it expected to be with respect to the 1995 financial statements, modified
as to uncertainty, audit scope, or accounting principles.
Item 7. Financial Statement, Proforma Financial Information and Exhibits.
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(c) The following Exhibit is filed with this report on Form 8-K:
16. Letter from Coopers & Lybrand L.L.P. dated September 5, 1996
SIGNATURES
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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 thereunto duly authorized.
CHANTAL SKIN CARE CORPORATION
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(Registrant)
By /s/ CHANTAL BURNISON
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Chantal Burnison
Chairman and Chief Executive Officer
Dated: September 6, 1996
Exhibit 16
[COOPERS & LYBRAND LETTERHEAD]
September 5, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the statements made by Chantal Skin Care Corporation (copy
attached), which we understand will be filed with the Commission, pursuant to
Item 4 of Form 8-K, as part of the Company's Form 8-K/A (Amendment No. 1) report
for the month of August 1996. We agree with the description of the disagreements
set forth in the second and third paragraphs of Item 4 of the Company's Form
8-K/A.
We have the following comments concerning the first and fifth paragraphs of Item
4:
As regards the separate engagement with respect to the shipments, orders and
returns of the Company's distributor, we previously advised the Company that we
were unable to complete our engagement because we could not obtain information
from the distributor that we considered necessary on a timely basis. Upon our
resignation as the Company's auditors, we advised the Company that we would not
complete such separate engagement.
With respect to the audit of the Company's June 30, 1995 financial statements,
we have informed the Company that we will release our report on such financial
statements upon the Company and its parent, Chantal Pharmaceutical Corporation,
meeting certain conditions regarding such items as the determination of the
proper SEC reporting form and satisfaction of our billings. Also with respect to
these financial statements, generally accepted auditing standards make it
necessary for us, in order to release our report thereon, to complete certain
procedures. In the fifth paragraph of Item 4, the Company has expressed its
expectations regarding the content of our report. We are unable to comment on
the Company's expectations until such procedures have been completed.
Very truly yours,
/s/ Coopers & Lybrand L.L.P.
