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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): Sept. 13, 1999 (Sept. 7, 1999)
CLARITI TELECOMMUNICATIONS INTERNATIONAL LTD.
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(Exact name of Registrant as specified in charter)
Delaware 33-90344 23-2498715
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
1735 Market Street, Mellon Bank Center, Suite 1300
Philadelphia, Pennsylvania 19125
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(Address of principal executive offices) (Zip Code)
215-979-3600
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(Registrant's telephone number, including area code)
1341 North Delaware Avenue, Philadelphia, PA 19125
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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) (1) Previous Independent Accountants
(i) On September 7, 1999 PricewaterhouseCoopers LLP ("PwC") resigned
as Registrant's independent accountants. PwC's decision to
resign was their own. Their decision to resign was made with no
prior notice given to Registrant.
(ii) Registrant engaged PwC on December 18, 1998 to audit its
consolidated financial statements for the year ending June 30,
1999. As a result, PwC has not reported on Registrant's
consolidated financial statements.
PwC has audited the consolidated financial statements of
GlobalFirst Holdings Ltd. ("GlobalFirst") for the years ended
June 30, 1998 and 1997. GlobalFirst was acquired by Registrant
on December 8, 1998 in a transaction accounted for as reverse
acquisition. GlobalFirst's audited financial statements for the
years ended June 30, 1998 and 1997, including PwC's report
thereon, were filed as an exhibit to a Form 8-K/A filed by
Registrant on February 22, 1999. PwC's report on such financial
statements contained no adverse opinion or disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope
or accounting principles.
PwC also has audited the consolidated financial statements of
Mediatel Global Communications Ltd. ("Mediatel") for the year
ended June 30, 1998. Mediatel was acquired by Registrant on
March 16, 1999. Mediatel's audited financial statements,
including PwC's report thereon, were filed as an exhibit to a
Form 8-K/A filed by Registrant on June 1, 1999. PwC's report on
such financial statements contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles.
(iii) Not applicable.
(iv) (A) In connection with the incomplete audit of Registrant's
consolidated financial statements for the year ended June
30, 1999, there were no disagreements with PwC 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 PwC
would have caused them to make reference thereto in their
report on the financial statements for such period.
In connection with the audits of GlobalFirst and Mediatel
referred to in (ii) above, there were no disagreements with
PwC 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 PwC would have caused them to make reference
thereto in their report on the financial statements for such
periods.
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(B)(1) and (C)
PwC informed Registrant that they had resigned because, in
their opinion, internal controls necessary to develop
reliable financial statements for the year ended June 30,
1999 for its recently acquired United Kingdom subsidiaries,
GlobalFirst and Mediatel, are not adequate at this time.
PwC expressed concern regarding the ability of GlobalFirst
and Mediatel to ensure the adequate prevention and detection
of fraud with respect to cash collections, properly allocate
cash receipts to customer accounts, properly record sales,
properly record fixed assets, and properly record
compensation to employees and directors. PwC expressed no
such concerns regarding internal controls over Registrant or
other subsidiary operations.
Registrant acquired GlobalFirst on December 8, 1998. On
February 3, 1999, Registrant sold Telnet Products and
Services Ltd. ("Telnet"), a wholly owned subsidiary of
GlobalFirst whose operations comprised the vast majority of
GlobalFirst's revenues and expenses for the years ended June
30, 1998 and 1997. A portion of the internal control issues
cited by PwC relate to Telnet, a business owned by
Registrant for a period of less than two months.
In spite of the fact that Registrant has owned GlobalFirst
for only nine months (seven months as of June 30, 1999) and
Mediatel for only six months (three months as of June 30,
1999), Registrant has undertaken initiatives to improve
internal controls over the remaining operations of
GlobalFirst and Mediatel, including a substantial overhaul
of the senior management team. Specifically, Registrant has
hired a new Managing Director for all of its European
operations and has replaced the GlobalFirst Finance
Director with a Chartered Accountant.
(D) Not applicable.
(E) Registrant has authorized PwC to respond fully to the
inquiries of the successor accountant, when engaged,
concerning the internal control issues.
(2) Not applicable.
(3) Previous Independent Accountants' Response
Registrant has requested that PwC furnish it with a letter addressed to
the SEC stating whether it agrees with the above statements. A copy of
PwC's letter to the SEC will be filed as an exhibit to a Form 8-K/A
when such letter is received.
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Signature
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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.
CLARITI TELECOMMUNICATIONS
INTERNATIONAL, LTD.
(Registrant)
September 13, 1999
By: s/James M. Boyd, Jr.
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James M. Boyd, Jr.
Vice President of Finance
and Chief Accounting
Officer