SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 17, 2004
(Date of earliest event reported)
KAHIKI FOODS, INC.
(Exact Name of Registrant as specified in its charter)
Ohio 333-113925
(State of Other Jurisdiction (Commission file Number)
of Incorporation)
31-1056793
(IRS Employer Identification No.)
1100 Morrison Road, Gahanna, Ohio 43230
(Address of principal executive offices)
Registrant's Telephone Number, Including Area Code
(614) 322-3198
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)
[ ] Pre-commencement communications pursuant to rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)).
ITEM 1.01 Entry into a Material Definitive Agreement.
ITEM 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On December 21, 2004, Kahiki Foods, Inc. ("Kahiki") entered into a
Convertible Note Purchase Agreement (the "Purchase Agreement") with Townsends,
Inc. ("Townsends"), pursuant to which Kahiki issued a $1,000,000 Convertible
Promissory Note due December 31, 2009 (the "Note") to Townsends. The Note bears
interest at the rate of 5% per annum, which accrues to maturity, and is
convertible into Preferred Stock, to be authorized, or Common Stock, at a
conversion price of $2.25 per share.
In connection with the Purchase Agreement, Kahiki and Townsends have
also entered into (i) a Supply Agreement pursuant to which Kahiki will purchase
a minimum of 20,000 pounds and a maximum of 40,000 pounds per week of chicken
products from Townsends at current market prices less $0.09; and (ii) a Co-pack
and Storage Agreement pursuant to which Kahiki will manufacture finished poultry
products for Townsends on a cost plus 10% basis.
Under the Purchase Agreement, Townsends will acquire a second
$1,000,000 Note under the same terms upon (i) Kahiki obtaining financing in the
amount of at least $2,000,000; (ii) Kahiki receiving all approvals necessary to
occupy and operate its Gahanna, Ohio manufacturing facility; and (iii) Kahiki
having transferred substantially all of its operations to the Gahanna, Ohio
manufacturing facility. Kahiki is also obligated to seek shareholder approval of
an amendment to Kahiki's Articles of Incorporation to authorize Convertible
Preferred Stock at the next annual meeting of Kahiki's shareholders. It is
anticipated that Townsends will convert the Note(s) to Preferred Stock upon
shareholder approval of the amendment. The Preferred Stock will provide for
cumulative annual dividends at an annual rate of $.1125 per share, will be
convertible into Common Stock on a share for share basis (subject to
anti-dilution rights), will have a liquidation preference of 1.5 times the
invested amount, and will entitle Townsends to appoint up to 2 members of
Kahiki's Board of Directors. A copy of the Purchase Agreement is attached hereto
as Exhibit 10.1 and a copy of the Note is attached hereto as Exhibit 10.2, each
of which are incorporated herein by reference.
In connection with these transactions, Kahiki and Townsends entered
into a Registration Rights Agreement. Under this agreement, Kahiki is required
to file a registration statement with the U.S. Securities and Exchange
Commission on demand by Townsends between December 21, 2005 and December 20,
2009, for the purpose of registering the resale of shares of Common Stock into
which the Notes and Preferred Stock may be converted. A copy of the registration
Rights Agreement is attached hereto as Exhibit 10.3 and is incorporated herein
by reference.
On December 17, 2004, Kahiki issued a Term Promissory Note (the "Term
Note") to Key Bank National Association. The Term Note is in the amount of
$2,232,000 and matures on June 20, 2012. The Term Note is secured by a
Commercial Security Agreement and an Open-End Mortgage on Kahiki's Gahanna, Ohio
manufacturing facility and equipment. A copy of the term Note is attached hereto
as Exhibit 10.6
Kahiki intends to use the proceeds of these transactions for general
corporate purposes, including payment of costs associated with the opening of
Kahiki's new Gahanna, Ohio manufacturing facility.
ITEM 4.01. Changes in Registrant and Certifying Accountant.
On December 20, 2004, the Board of Directors of Kahiki, on the
recommendation of its audit committee, dismissed Child, Sullivan & Company as
its principal independent accountants. Neither Child, Sullivan & Company's
report on Kahiki's financial statements for its most recent fiscal years nor GBQ
Partners LLP (Kahiki's previous principal independent account) report on
Kahiki's financial statements for its fiscal year ended March 31, 2003,
contained an adverse opinion or disclaimer of accounting principles. During
Kahiki's two most recent fiscal years for which Child Sullivan & Company or GBQ
Partners LLC issued an audit report, and for the subsequent interim period
preceding the dismissal of Child, Sullivan & Company, there were no
disagreements between Kahiki and such accountants on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which if not resolved to the former accountant's satisfaction, would
have caused them to make reference to the subject matter of the disagreement in
connection with their reports.
Kahiki has requested that Child, Sullivan & Company furnish it with a
letter addressed to the SEC stating whether it agrees with the above statements.
A copy of Child, Sullivan & Company's letter to the SEC, dated September 12,
2005, is filed as Exhibit 16.1 to this Form 8-K.
On December 20, 2004, the Board of Directors of Kahiki, on the
recommendation of its audit committee, engaged Plante & Moran, PLLC as its
principal accountant to audit Kahiki's financial statements for its fiscal year
ending March 31, 2005.
ITEM 9.01. Financial Statements and Exhibits.
(c). Exhibits
Exhibit Index
10.1* Convertible Note Purchase Agreement between Kahiki Foods, Inc. and
Townsends, Inc. dated December 21, 2004.
10.2* Convertible Promissory Note to Townsends, Inc. dated December 21, 2004.
10.3* Registration Rights Agreement between Kahiki Foods, Inc. and Townsends,
Inc. dated December 21, 2004.
10.4* Supply Agreement between Kahiki Foods, Inc. and Townsends, Inc. dated
December 21, 2004.
10.5* Co-Pack and Storage Agreement between Kahiki Foods, Inc. and Townsends,
Inc. dated December 21, 2004.
10.6* Term Promissory Note to Key Bank National Association dated
December 17, 2004.
16 Letter on change of certifying accountant.
- ---------------------
* Previously filed.
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.
KAHIKI FOODS, INC.
By: /s/ Alan L. Hoover
------------------
Alan L. Hoover, Acting President
Dated: September 12, 2005