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): October 22, 2007
SCOTT'S LIQUID GOLD-INC.
(Exact name of Registrant as specified in its charter)
Colorado 001-13458 84-0920811
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
4880 Havana Street, Denver, CO 80239
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (303) 373-4860
Check the appropriate box below if the Form 8-K is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
[ ] 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 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR
A RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW
On October 22, 2007, the Audit Committee of the Board of Directors
of Scott's Liquid Gold-Inc. concluded that our financial statements for
the quarter ended March 31, 2007 and for the quarter and six months
ended June 30, 2007, included in our quarterly reports on Form 10-QSB
for those quarters, should be revised to reflect adjustments to our
reserve for promotional activities which were deducted from gross
sales for the quarter ended March 31, 2007. Accordingly, these
financial statements and press releases on the results for these
periods should not be relied upon.
The adjustments concern a retailer specific consumer rebate
program for purchases of our Alpha Hydrox products sold during a
one-week period in March 2007 at a retail drug store chain. The rebate
provided for a payment (through the retailer) to the consumer in the
amount of the entire consumer purchase price and the reimbursement by
us to the retailer of the full rebate amount plus a handling fee.
These 100% of retail priced rebate ("deep rebate") programs are
sometimes used by manufacturers; however, we have never used in the
past, and have no intention of using in the future, any such deep
rebate program to promote our products. One of our regional sales
managers, exceeding his authority and without the approval of our
management, entered into this rebate program with the retail drug
store chain and did not inform management of this arrangement. We
learned about this rebate program during the third quarter when
analyzing invoice deductions by the retailer. Recently, we learned
that the total obligation under the rebate program is approximately
$314,000.
The addition of the approximately $314,000 to our reserve for
promotional activities results in decreasing net sales and net
accounts receivable by approximately $314,000, increasing loss from
operations and net loss by this amount and decreasing retained
earnings by the same amount, all as of March 31, 2007. There will
then be corresponding changes to these items as of and for the
six-months ended June 30, 2007.
We are reviewing the impact of these events on the effectiveness
of our disclosure controls and procedures at March 31, 2007. We have
also made the following changes to our disclosure controls and
procedures:
.. The addition of a National Sales Director, as an additional
level of review and approval over promotional budgets and program spending.
.. Enhanced budgeting procedures and additional periodic reviews
of our promotional programs by our National Sales Director and executive
management.
.. Enhanced follow up by our National Sales Director and corporate
headquarters to insure that the Company has received all pertinent
documentation for sales promotional proposals, commitments and
contracts.
.. Required sales call reports, in written form, shortly after
sales appointments between Company personnel and our customer's buyer
and/or purchasing personnel. This report would, among other things,
summarize any commitments made on behalf of the Company or customer.
.. Quarterly, or more often if warranted, review by sales management
and executive management of promotional commitments to insure accurate
financial reporting.
As a result of the adjustments, we will restate our financial
statements mentioned above. We will amend our quarterly reports on
Form 10-QSB for the periods ended March 31, 2007 and June 30, 2007 to
include the restated financial statements as soon as practicable.
Our Audit Committee and management discussed the matters
described above with Ehrhardt Keefe Steiner & Hottman P.C., our
independent accountants.
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: October 25, 2007 /s/ Jeffry B. Johnson
-
By: Jeffry B. Johnson
Chief Financial Officer and
Treasurer