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): February 24, 1998
Data Systems Network Corporation
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation)
1-13424 38-2649874
(Commission File Number) (IRS Employer Identification No.)
34705 West Twelve Mile Road, Suite 300, Farmington Hills, Michigan 48331
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 489-8700
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On February 24, 1998, Data Systems Network Corporation issued a
press release announcing that it has become aware of certain accounting
irregularities which may have resulted in an overstatement of 1996 earnings
and that its independent auditors had issued a letter notifying the Company
that its auditors' report dated March 4, 1997 on Data Systems' financial
statements should no longer be relied upon. The press release and the
letter from its independent auditors referred to therein are attached hereto
as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by
reference.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 Press Release, dated February 24, 1998
Exhibit 99.2 Letter from KPMG Peat Marwick LLP, dated February 24, 1998
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.
February 26, 1998 DATA SYSTEMS NETWORK CORPORATION
/s/ Michael W. Grieves
----------------------------------
By: Michael W. Grieves
President and Chief
Executive Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE
DATA SYSTEMS NETWORK EXPECTS
REPORTING ADJUSTMENTS
FARMINGTON HILLS, MI -- February 24, 1998 -- Data Systems Network
Corporation (Nasdaq: DSYS; Pacific Stock Exchange: DSY) has become aware of
certain accounting irregularities which may have resulted in an
overstatement of 1996 earnings, Chairman and CEO Michael W. Grieves reported
today.
Grieves said that the board of directors has appointed a special committee
of the board to investigate the matter, and outside accounting experts and
legal counsel have been retained to assist in the investigation.
"The extent to which prior financial statements, including 1997's first
three quarters, may need to be restated is not known at this time," Grieves
said, "although there will likely be material adjustments to those financial
statements."
"Preliminary results of the investigation indicate that the adjustments are
principally the result of billing irregularities, a portion of which
involves the recognition of revenue in 1996 more properly reportable in
1997. Based on these preliminary results, the potential adjustment of
previously reported 1996 earnings could approximate $1 million," Grieves
said. "The investigation is ongoing and results of the review will be
announced as soon as the investigation is complete."
Grieves also announced today the resignation of Chief Financial Officer
Philip M. Goy, who will remain as a consultant to Data Systems. The company
has begun a search for a new chief financial officer.
Data Systems also reported that KPMG Peat Marwick LLP has notified the
company that its auditors' report dated March 4, 1997 on Data Systems'
financial statements should no longer be relied upon.
Data Systems provides computer network services and products that enable the
control of complex distributed computing environments and allow companies to
capitalize on their inherent investments in technology and people. The
company provides a wide range of network integration services including
installation, consultation, technical support and training. It also
provides specialized services in network management, application
development, imaging systems and Year 2000 consulting. Based in Farmington
Hills, Michigan, Data Systems has 21 offices and more than 250 employees.
Certain statements in this release constitute "forward-looking statements"
within the meaning of the federal securities laws. Such statements involve
known and unknown risks and uncertainties which may cause the company's
actual results, performance or achievements to be materially different than
any future results, performance or achievements implied in this release.
Investors are cautioned that all forward-looking statements involve risks
and uncertainty.
For additional information contact:
Gabe Werba, Durocher Dixson Werba, LLC
313-259-5803
February 24, 1998
The Board of Directors
Data Systems Network Corporation
34705 W. Twelve Mile Road
Suite 300
Farmington Hills, MI 48331
Gentlemen:
We have examined the financial statements of Data Systems Network
Corporation ("Data Systems") as of December 31, 1996 and 1995 and for each
of the years in the two-year period ended December 31, 1996 and issued our
auditor's report therein dated March 4, 1997 (the "auditors' report").
On Februray 24, 1998, Data Systems announced that the Board of Directors has
formed a Special Committee to investigate certain matters with respect to
its financial statements and that the Company is of the view that "there
will likely be material adjustments to the Company's financial statements."
In light of the Company's announcement, raising questions relating to the
Company's financial statements, we cannot continue to be associated with
such financial statements and, accordingly, KPMG Peat Marwick LLP hereby
advises you that our auditors' report on the consolidated financial
statements as of December 31, 1996 and 1995 and for each of the years in the
two-year period ended December 31, 1996 (the "Financial Statements") should
no longer be relied upon.
We request that you advise those persons who have received a copy of KPMG
Peat Marwick LLP's auditors' report on Data Systems Network Corporation's
Financial Statements and whom you believe are relying on, or who are likely
to rely on, the Financial Statements and the accompanying auditors' report
of our notification to you that the auditors' report should no longer be
relied upon. Further, we request you to determine, together with your legal
counsel, the disclosure(s) which should be made to the Securities and
Exchange Commission and any other regulatory body having jurisdiction over
Data Systems. Finally, we would expect to be simultaneously supplied with
copies of any notifications which you make pursuant to the requests set
forth in this paragraph.
Very truly yours,
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
