SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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) August 15, 1996
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Organik Technologies, Inc.
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(Exact Name of Registrant as Specified in Charter)
Washington 0 - 18935 81 - 0440517
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1919 - 70th Avenue West, Tacoma, Washington 98466
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone Number, including area code (206) 564-1400
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(Inapplicable)
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(Inapplicable)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
By Stock Purchase Agreement ("Agreement") dated August 15, 1996 between the
registrant and Emerald Apparel, Inc. ("Emerald"), registrant has agreed to
acquire all of the outstanding shares of capital stock of Emerald in exchange
for 2,000,000 shares of common stock of registrant, plus an additional 3,000,000
shares of such common stock contingent upon the registrant's earning certain
amounts of Net Income Before Taxes (as defined) in the current and two
subsequent fiscal years, as follows:
(a) Up to 1,000,000 such shares of common stock shall be issued at the
rate of 4 shares for each dollar of Net Income Before Taxes between $0 and
$250,000 earned during registrant's fiscal year ended July 31, 1997;
(b) Up to an additional 1,000,000 such shares shall be issued at the
rate of 4 shares for each dollar of Net Income Before Taxes between
$250,000 and $500,000 earned during registrant's fiscal year ended July 31,
1998; and
(c) Up to an additional 1,000,000 such shares shall be issued at the
rate of 4 shares for each dollar of Net Income Before Taxes between
$500,000 and $750,000 earned during registrant's fiscal year ended July 31,
1999.
In the Agreement, Emerald represents and warrants that it has the
ability to obtain, and shortly following the closing under the Agreement will
obtain, orders for the manufacture and delivery of approximately $3,000,000 in
fleece, knit shirts and shorts apparel items from major U. S. retailers, and
that Emerald has or will arrange for production and financing for all such
orders booked. In the Agreement, Emerald also represents and warrants that it
is newly formed, has never had any operations and has no indebtedness of any
type whatsoever, including no obligations for back wages or salaries, no fees to
professionals, and no obligations to trade creditors. Emerald does not have a
material amount of assets.
Pursuant to the Agreement, Barry Watson and A. J. Salomon, who are
principals of Emerald, have been appointed President and Chief Executive
Officer, and Secretary-Treasurer and Chief Financial Officer, respectively, of
the registrant. Also, registrant's official By-Laws have been amended to
increase the number of Directors of registrant to eight, and Messrs. Watson and
Salomon, together with Dean Sanders, have been appointed to registrant's Board
of Directors. In the Agreement, Emerald represents and warrants that, subject
to any action to the contrary by the Board of Directors or shareholders of
registrant, Messrs. Watson, Sanders and Salomon will continue to serve as
managers of registrant for at least 12 months following the Closing under the
Agreement. Registrant's former President and Chief Executive Officer, William
Bryson, Chief Financial Officer, William Gould, and Vice-Chairman of the Board
and Director, Matthew Gensler, resigned those positions in June 1996. Set forth
below is certain relevant biographical information concerning Messrs. Watson,
Saloman and Sanders.
Barry Watson has spent the greater part of his apparel career in retail
sales as buyer, merchandiser, product development manager, designer, and store
manager. A graduate of the Wal-Mart Institute of Management, Mr. Watson
recently directed the $350 million men's apparel division of Sam's Club, and
prior to that was employed by Macy's, Emporium-Capwell, May Company, Carter-
Hawley-Hale, Wal-Mart and Gottschalk's. As a product development manager, Mr.
Watson spent twelve years designing and developing apparel lines. While at the
May Company, Mr. Watson was responsible for the development of the CHRISTOPHER
BROOKS line, and while at Carter-Hawley-Hale, he developed the NEIL-MARTIN
label. In addition to design and development, Mr. Watson is experienced in
sourcing apparel manufacturing in the Far East, Central and South America, the
United States and Canada.
A. J. Salomon, founder and president of Stafford & Company, consults in the
acquisition of public companies and has operated his own development company
engaged in construction, financing and marketing of real estate in the Western
United States. Mr. Salomon is the owner of Capay Cattle Company and for eight
years operated Sierra National Bank, a nine-branch national bank in Northern
California, for which he served as chairman of the board. Beginning as a broker
and financial consultant in the acquisition and sale of commercial real estate,
Mr. Salomon expanded his operations over the years to include construction,
property management, land acquisition and real estate marketing.
Dean Sanders has served in most departments during his over 20-year career
with Wal-Mart Stores, his most recent position being CEO and president of Sam's
Club, from which he retired in 1995. While Mr. Sanders was CEO of Sam's Club,
that company grew from 150 clubs to over 430 and developed Sam's Club Super
Centers, outlets that combine grocery store operations with retail operations in
a common center. Sam's Club currently has annual revenues of over $20 billion.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
(Inapplicable)
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
(a) On August 16, 1996 , John R. Gilbert, Chairman of registrant's Audit
Committee, advised registrant's independent accountants, Price Waterhouse LLP,
that with the acquisition of Emerald, registrant would have a complete change in
management and that the new management plans to solicit proposals for new
auditors, thereby dismissing Price Waterhouse LLP as auditors. The decision to
change accountants has been approved by registrant's Audit Committee.
The audit reports of Price Waterhouse LLP on the financial statements of
registrant for registrant's last two fiscal years did not contain an adverse
opinion or disclaimer of opinion, nor was either opinion qualified or modified
as to uncertainty, audit scope, or accounting principles, except that their
report on the financial statements for the year ended July 31, 1994 included an
emphasis of matter paragraph regarding registrant's recurring losses and
declining cash position. During registrant's two most recent fiscal years and
the subsequent interim
periods preceding such termination, there have been no disagreements with Price
Waterhouse LLP 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 Price Waterhouse LLP, would have caused it
to make reference to the subject matter of the disagreements in connection with
its report. There have occurred no "reportable events" within the meaning of
Item 304(a)(1)(v) of Regulation S-K during registrant's two most recent fiscal
years and the subsequent interim periods preceding such termination.
The registrant has requested that Price Waterhouse LLP furnish it with a
letter addressed to the Commission stating whether or not it agrees with the
above statements. A copy of such letter dated August 21, 1996 is filed as
Exhibit 16 hereto.
(b) Registrant contemplates that new auditors will be engaged to audit
registrant's financial statements for the fiscal year ended July 31, 1996 as
soon as the closing of the books for that fiscal year have been completed.
ITEM 5 OTHER EVENTS.
(Inapplicable)
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
(Inapplicable)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The following Exhibits are filed with this Current Report on Form 8-K:
EXHIBIT DOCUMENT
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2.1 Stock Purchase Agreement dated August 15, 1996 with
Emerald Apparel, Inc.
4.1 Letter dated August 16, 1996 from John R. Gilbert on
behalf of registrant's Audit Committee to Rick Greaves
of Price Waterhouse LLP
4.2 Letter dated August 21, 1996 from John R. Gilbert on
behalf of registrant's Audit Committee to Richard D.
Greaves of Price Waterhouse LLP requesting that it
furnish the Commission with a letter stating whether or
not it agrees with the statements of registrant in
Item 4(a) of this Current Report on Form 8-K
EXHIBIT DOCUMENT
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16 Letter dated August 21, 1996 from Price Waterhouse LLP.
ITEM 8. CHANGE IN FISCAL YEAR.
(Inapplicable)
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.
Organik Technologies, Inc.
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(Registrant)
Date: August 21, 1996 By: /s/ Finn E. Walstad
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(Finn E. Walstad)
Senior Vice-President