Form 8-K
U.S. Securities and
Exchange Commission
Washington, D.C. 20549
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act
of 1934
TELESOFT CORP.
(Exact name of small business issuer as
specified in its charter)
Arizona 86-0431009
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3216 North Third Street, Phoenix, Arizona 85012
(Address of principal executive offices)
(602) 265-6311
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Item 4. Changes in Registrant's Certifying Accountants.
On October 16, 1997, Coopers & Lybrand, L.L.P informed the Registrant that
they resigned as the Registrant's independent certified public accountants.
Coopers & Lybrand, L.L.P.'s reports on the Registrant's financial statements
for the year ended November 30, 1996, did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or principles. There were no disagreements with Coopers &
Lybrand, L.L.P. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure through Coopers &
Lybrand, L.L.P.'s issuance of their report in connection with their audit of
the Registrant's financial statements for the year ended November 30, 1996
and through the interim period ending May 31, 1997.
Coopers & Lybrand, L.L.P. (former accountant) disagreed with the Registrant
regarding the following two issues during the quarterly review of the
Registrant's financial statements for the three month period ended August 31,
1997:
Goodwill GoodNet: the former accountant informed the Registrant that in order
to evaluate the recoverability of goodwill associated with GoodNet, the
Registrant would need to prepare a detailed forecast of GoodNet's projected
income and cash flows. Based on the results of this forecast the Company
must evaluate whether the asset is expected to be recovered through GoodNet's
earnings based on guidance of SFAS 121 "Impairment of Long Lived Assets". If
the projected earnings are not sufficient to recover the goodwill, the
Registrant is required to consider whether the asset is impaired as defined
by SFAS 121. If the Registrant determines that the asset is impaired, it is
required to reduce the goodwill to its net realizable value. The former
accountant does not believe that the Registrant has completed such an analysis,
and therefore should consider a write down of a portion of its intangible
assets related to GoodNet. It is the opinion of the Registrant's management,
based upon its internal projections, that the Registrant will be able to
recover the goodwill associated with GoodNet. Management believes that a
majority of the goodwill associated with GoodNet was derived from its dialup
business, which is a profitable line of business. The Registrant will
re-evaluate the potential impairment of goodwill at the end of the
Registrant's fiscal year on November 30, 1997.
Deferred Tax Asset: The former accountant informed the Registrant that deferred
tax assets must be evaluated for recoverability in accordance with the
provisions of SFAS 109 "Accounting for Income Taxes". In the opinion of the
former accountant, the Registrant has sold 25% of the its interest in GoodNet,
and therefore the Company is unable, from the date of sale, to include GoodNet
in the consolidated tax return of the Registrant. The former accountant
believes that since GoodNet has no proven prior taxable income and that
there is no assurance of sufficient amount of future income, a $653,000
deferred tax asset relating to GoodNet should be reserved for at the end of
the quarter ended August 31, 1997. It is the opinion of the Registrant's
management that the Registrant will utilize the deferred tax asset either
through future earnings or by securing additional interest in GoodNet in
order to include them in the consolidated tax return of the Registrant. The
Registrant will re-evaluate the necessity for an allowance against its
deferred tax asset at the end of its fiscal year on November 30, 1997.
This report contains forward-looking statements within the meaning of
section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such statements involve certain risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements.
The Registrant has not yet selected a new independent certified public
accountant.
Item 7. Exhibits
16 Letter from Coopers and Lybrand, L.L.P regarding change in certifying
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.
Telesoft Corp.
/s/ Thierry E. Zerbib
Date: October 30, 1997 Thierry E. Zerbib
Vice President/Secretary
Exhibit 16 Letter from Coopers & Lybrand, L.L.P. regarding change in
certifying independent accountants
Coopers & Lybrand, L.L.P.
2901 North Central Avenue
Suite 1000
Phoenix, Arizona 85012-2755
October 28, 1997
Securities and Exchange Commission
450 South Fifth Street, N.W.
Washington, D.C.
Gentlemen:
We have read the statements made by Telesoft Corp. (copy attached), which we
understand will be filed with the Commission, pursuant to Item 4 of Form 8-K
report for the month of October, 1997. We agree with the statements
concerning our Firm in such Form 8-K.
Very truly yours
/s/ Coopers & Lybrand, L.L.P.
BJT/jal
Attachment
