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): January 5, 1998
SCOTT'S LIQUID GOLD-INC.
(Exact name of Registrant as specified in its charter)
Colorado 0-12343 84-0920811
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
4880 Havana Street, Denver, CO 80239
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (303) 373-4860
Item 5. Other Events.
In June 1997, a lawsuit was filed against Scott's Liquid Gold-Inc. (the
"Company") by Leslee Brooks, her husband and a related corporation in the
federal District Court for the District of Colorado. Other defendants include
Neoteric Cosmetics, Inc., which is a wholly-owned subsidiary of the Company,
Jerome J. Goldstein and the Goldstein Family Limited Partnership. Leslee Brooks
is a daughter of Jerome J. Goldstein, Chairman of the Company, and a sister of
Mark E. Goldstein, President and Chief Executive Officer of the Company. The
Goldstein Family Limited Partnership was established in November, 1996 by Mr.
and Mrs. Jerome J. Goldstein and received common stock of the Company previously
held by Mr. and Mrs. Goldstein.
In December, 1997, the plaintiffs in this case filed an amended complaint
which adds three claims against the Company and Neoteric Cosmetics, Inc. Some
of these claims were previously made against Jerome J. Goldstein alone. The
plaintiffs continue to claim that their disclosure to the Company in 1991 of the
concept of an alpha hydroxy acid base product, as well as their assistance in
developing the Company's Alpha Hydrox products, entitles the plaintiffs under a
doctrine of unjust enrichment to compensation in an amount equal to at least
one-third of the income from the product since its inception. The plaintiffs
continue to request punitive damages for this claim. In the amended complaint,
the plaintiffs also claim that they entered into a joint venture partnership
with the defendants to earn profits from originating, developing and marketing
alpha hydroxy skin care products, that the defendants breached fiduciary duties
resulting from the relationship of the parties, and that the Company and its
subsidiary aided and abetted, and conspired as to, the alleged breaches of
fiduciary duties. The plaintiffs assert additionally that the defendants made
fraudulent representations and conspired as to those representations by Mr.
Goldstein's representing that the plaintiffs would get rich and by the
defendants' failure to disclose that they never intended to compensate the
plaintiffs. The third additional claim is for negligent misrepresentations and
conspiracy by the defendants regarding these same matters. For each of these
claims, the plaintiffs claim one-third of the total income from Alpha Hydrox
products, a minimum amount of $10 million and punitive damages. In a related
claim, the plaintiffs continue to claim that there should be a "constructive
trust" imposed on the stock transferred to the Goldstein Family Limited
Partnership.
The Company unequivocally believes that there was no agreement, written or
oral to provide any compensation to the plaintiffs beyond consulting fees paid
by the Company to Dr. Brooks, that there was no expectation of such compensation
and that the compensation already paid to Dr. Brooks for consulting services was
fair and reasonable. The Company views the lawsuit as groundless and is
vigorously defending itself. As previously stated, discovery is underway in
this litigation. The trial in the Brooks case is tentatively scheduled to
commence in February, 1998, although the trial date may be changed to a later
time.
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.
Scott's Liquid Gold-Inc.
(Registrant)
Date: January 5, 1998 By: Barry Shepard, Treasurer
