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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): April 19, 1999
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC
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(Exact name of Registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
0-15949 94-2862863
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(Commission (IRS Employer
File Number) Identification No.)
75 Rowland Way, Novato, CA 94945
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(Address of principal executive offices) (Zip code)
(415) 257-3000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) On April 19, 1999, International Microcomputer Software, Inc. (the
"Company") was informed by Deloitte & Touche LLP ("D&T"), that it had resigned
as the Company's independent accounting firm.
D&T's audit reports on the Company's financial statements for the fiscal
years ended June 30, 1998 and 1997 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
In connection with the audits of the Company's consolidated financial
statements for each of the two fiscal years ended June 30, 1998 and 1997, and in
the interim periods subsequent to June 30, 1998, preceding the date of D&T's
resignation, there were no "reportable events," as that term is defined in the
instructions to this Form and the regulations applicable to this Item. In
connection with the audits of the Company's consolidated financial statements
for each of the two fiscal years ended June 30, 1998 and 1997, and in the
interim periods subsequent to June 30, 1998, preceding the date of D&T's
resignation, there were no "disagreements," as that term is defined in the
instructions to this Form and the regulations applicable to this Item, with D&T
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure which, if not resolved to the
satisfaction of D&T would have caused D&T to make reference to the matter in
their report, except as follows:
On September 29, 1998, The Learning Company ("TLC") paid the Company
approximately $1,690,000, representing amounts due to the Company from the sale
of the Family Heritage line of software products by the Company to TLC
($1,260,000) and other existing contractual agreements ($430,000). The Company
had not recorded revenues or receivables for such amounts due from TLC in its
financial statements for prior periods. On October 2, 1998, TLC and the Company
entered into a software license agreement whereby TLC sold Org Plus, a software
program, to the Company in exchange for $3,500,000 as follows: $1,700,000 paid
by the Company on October 2, 1998, and $450,000 due on each of January 1, 1999,
April 1, 1999, July 1, 1999 and October 1, 1999.
The Company initially believed that revenue should be recognized on a
cash basis in the quarter ended September 30, 1998 for the $1,690,000 TLC
payment and that the full acquisition price of $3,500,000 for the Company's
acquisition of Org Plus should be accounted for separately in the quarter ended
December 31,1998. D&T's position was that the two transactions should be treated
as one transaction in the quarter ended December 31, 1998 due to several
factors. The audit committee of the Company's Board of Directors discussed the
subject matter of the accounting disagreement with Deloitte & Touche. The
Company discussed the subject matter of the accounting disagreement with other
independent accounting firms. After these discussions with D&T, the Company
agreed and accounted for the above transactions in accordance with D&T's
position. Accordingly, the Company did not recognize revenue for the quarter
ended September 30, 1998 for the cash receipt from TLC. In the quarter ending
December 31, 1998, the Company recorded the acquisition of OrgPlus at a net
amount of $1,810,000.
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(b) The Company is engaged in the process of selecting another firm to act as
the Company's independent accountants. The Company will authorize D&T to respond
fully to the inquiries of the Company's successor independent accounting firm,
including with respect to the accounting disagreement described in (a) above.
D&T's letter to the Company is attached as an Exhibit to this Report.
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ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
16.1 Letter from D&T dated April 26, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 26, 1999
International Microcomputer Software, Inc.
By:
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Geoffrey B. Koblick
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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16.1 Letter from D&T dated April 26, 1999.
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EXHIBIT 16.1
April 26, 1999
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Re: International Microcomputer Software, Inc.
File No.: 0-15949
Dear Sir/Madam:
We have read Item 4(a) of the Form 8-K of International
Microcomputer Software, Inc. dated April 26, 1999, and agree with the statements
contained therein.
Very truly yours,
/s/ Deloitte & Touche LLP
