SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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)
APRIL 14, 2000
OMNI NUTRACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UTAH 0-18160 87-046822
(STATE OF OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
5310 BEETHOVEN STREET
LOS ANGELES, CA 90066
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 306-3636
N/A
(FORMER NAME AND FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
As of April 14, 2000, Arthur Andersen LLP, Independent Public Accountants, the
independent accountants previously engaged as the principal accountant to audit
the financial statements of Omni Nutraceuticals, Inc. (the "Company"
or the "Registrant"), was terminated. The Company had elected to engage
another national certified public accounting firm to audit its financial
statements on an ongoing basis. As of April 12, 2000, the firm of Singer, Lewak
Greenbaum & Goldstein LLP was engaged as the independent accountant for the
Registrant to provide services after April 14, 2000, the date of filing of the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1999.
Except as set forth below, the audit reports of Arthur Andersen LLP on the
financial statements of the Company as of and for the years ended December 31,
1999, 1998, and 1997 did not contain any adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to audit scope or accounting
principles.
The financial statements of the Company for the year ended December 31, 1999
contains a statement that losses from operations, a working capital deficit and
a retained deficit, raise substantial doubt about the Company's ability to
continue as a going concern. The notes to the financial statements describe
management's plan to address these concerns, which include (i) the Company
raised $3,000,000 via a private placement in January 2000, (ii) the Company
raised $2,100,000 via a private placement in March 2000, (iii) the Company has a
commitment from the January 2000 investor to provide an additional $2,000,000
in private placement funding contingent on the Company achieving certain sales
benchmarks for the first two quarters of 2000; (iv) the Company is currently
negotiating to raise an additional $15,000,000 via a private placement with a
plan to pay off the Company's term loan with the proceeds; (v) the Company has
received a waiver from its credit facility lender for violations of certain
covenants included in the loan agreement; (vi) the Company has reduced portions
of its fixed overhead expenses, including executive salary reductions of
$1,300,000; (vii) Management has revised its marketing strategy and plans to
reduce advertising expenditures; and (viii) Management intends to focus
additional efforts toward developing its e-commerce operations to generate
additional revenues. The notes to the financial statements further state that
there are no assurances that the capital already raised by the Company in
conjunction with the expense reductions will be sufficient to fund the Company's
operations through 2000; there are no assurances that the Company will be
able to successfully achieve the sales benchmarks necessary to raise the
additional $2,000,000 or successfully raise other additional private placement
funds; there is no assurance that Management will be able to successfully enter
the e-commerce marketplace; and the failure of the Company to successfully
achieve one or all of the above items will have a material impact on the
Company's financial position and results of operations.
In connection with their audits of the financial statements of the Company for
the years ended December 31, 1998 and December 31, 1999, Arthur Andersen LLP
reported to the Company's Board of Directors conditions they believe to be
material weaknesses in the Company's system of internal accounting and financial
controls. In response, management has begun to identify measures to improve the
Company's system of internal controls, including implementing more rigorous
internal accounting policies, procedures and controls. Management believes these
improved procedures should correct the noted weaknesses.
In May 1999, the Company filed the March 31, 1999 Quarter Report on Form 10-Q
with the Securities and Exchange Commission without resolving the issue raised
by Arthur Andersen LLP regarding a potential adjustment. This matter was
resolved by the Company when it filed Form 10-Q/A on June 9, 1999.
Material adjustments to the Registrant's books were identified during the 1999
audit process and such adjustments were recorded in the Registrant's financial
statements included it its Annual Report on Form 10-K for the year ended
December 31, 1999. Arther Andersen LLP has recommended that management review
the effect of such adjustments on interim periods within the year ended December
31, 1999 and determine whether Quarterly Reports on Form 10-Q filed during 1999
need to be amended. Management has determined to review such recommendations
with its new accounting firm and to provide such amended filings if appropriate.
The decision to change accountants was approved by the board of directors of
the Company on April 12, 2000. Other than as set forth above, during the
Company's two most recent fiscal years and any subsequent interim period
preceding the change, there were no disagreements with the former accountants on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of the former accountants, would have caused them to make
reference to the subject matter of the disagreements in connection with their
report. The Registrant has provided a copy of this disclosure to its former
accountants, and the Registrant requested that the former accountants furnish
the Registrant with letters addressed to the Securities and Exchange Commission
stating whether they agree with the statements made by the Registrant, and,
if not, stating the respects in which they do not agree. A copy of the
former accountants' responses indicating agreement is included as an exhibit
to this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
16.1 Letter dated April 18, 2000, from Arthur Anderson LLP regarding its
concurrence with the statements made by the Registrant in this Current Report.
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SIGNATURE
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.
OMNI NUTRACEUTICALS, INC.
Date: April 18, 2000 By: /s/Klee Irwin
----------------
Klee Irwin
President and Chief
Executive Officer
Arthur Andersen
Arthur Andersen LLP
633 West Fifth Street
Los Angeles, CA 90071-2008
Tel 213 614 6500
Office of the Chief Accountant
Securities and Exchange
Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
April 20, 2000
Dear Sir/Madam,
We have read the paragraphs two through six of Item 4 in the Form 8-K dated
April 14, 2000 of Omni Nutraceuticals, Inc. filed with the Securities and
Exchange Commission and are in agreement with the statements contained therein.
Very truly yours,
/s/ Arthur Andersen LLP
Arthur Andersen LLP
cc: Mr. Klee Irwin, Chief Executive Officer, Omni Nutraceuticals, Inc.
