SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
December 15, 1998 0-26392
Date of Report (Date of Earliest Commission File Number
Event Reported)
LEVEL 8 SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 11-2920559
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
1250 Broadway
35th Floor
New York, New York 10001
(Address of Principal Executive Offices) (Zip Code)
(212) 244-1234
(Registrant's telephone number, including area code)
Item 4. Changes in Registrant's Certifying Accountant
On December 15, 1998, Level 8 Systems, Inc. (the "Company")
dismissed Grant Thornton, LLP ("Grant") as its independent
auditors.
The decision to change independent auditors was recommended
by the Audit Committee of the Board of Directors and approved by
the Board of Directors. The decision to dismiss Grant was made
in conjunction with the recent acquisition of Seer Technologies,
Inc. ("Seer") by the Company. Given the size of the Company
following the acquisition of Seer, the Company believed that it
required a larger firm with greater resources. The Company is in
the process of selecting a new accounting firm.
Grant had served as independent auditors of the Company
since January 1998, succeeding Lurie, Besikof, Lapidus & Co.,
LLP, who served as independent auditors to the Company (and the
Company's predecessor entities) for the ten years preceding its
January 28, 1998 replacement by Grant.
During the most recent fiscal year and any subsequent
interim period, none of Grant's reports on the Company's
financial statements contained an adverse opinion or a disclaimer
of opinion or was qualified or modified as to uncertainty, audit
scope or accounting principles.
In connection with the preparation of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1998, the Company discussed with Grant whether the
Company should recognize as revenue in the third quarter of 1998
$2.96 million the Company had billed Microsoft Corporation. The
Company expressed the view that all of that revenue should be
reflected in the third quarter. Grant expressed the view that
none of that revenue should be reflected in the third quarter.
After discussion, the Company deferred the recognition of all
such revenue and indicated in the Form 10-Q that it was in the
process of determining how long generally accepted accounting
principles required the Company to continue to defer recognizing
such revenue. Subject to the foregoing, there have been no
disagreements with Grant regarding any matter of accounting
principles or practices, financial statement disclosure or
auditing scope or procedure. A letter from Grant is attached
hereto as Exhibit 16.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits
16. Letter from Grant Thornton LLP regarding change in
certifying accountant, dated December 22,1998.
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.
LEVEL 8 SYSTEMS, INC.
(Registrant)
Dated: December 22, 1998 By: /s/ Yigal Baruch
Name: Yigal Baruch
Title: Chief Financial Officer
Exhibit 16.
[LETTERHEAD OF GRANT THORNTON LLP]
December 22, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Re: Level 8 Systems, Inc.
File No. 0-26392
Dear Sir or Madam:
We have read Item 4 of the Form 8-K of Level 8 Systems, Inc.
dated December 22, 1998. We believe it should be supplemented
and, in part, amended as follows:
Grant Thornton LLP did not discuss the subject matter of the
disagreement of the Microsoft contract with the Audit Committee
or the Board of Directors; however a member of the audit
committee did discuss the subject matter of the disagreement with
Grant Thornton LLP. The Company has authorized Grant Thornton
LLP to respond fully to the inquiries of any accounting firm
concerning the subject matter of the disagreement.
In addition, for the year ended December 31, 1997 Grant Thornton
LLP advised the Audit Committee of the Board of Directors of the
Company in a letter dated February 23, 1998, that there existed
significant deficiencies in the Company's internal control
structure that, in their judgment, could adversely affect the
Company's ability to record, process, summarize, and report
financial data consistent with the assertions of management in
the financial statements.
Very truly yours,
/s/ Grant Thornton LLP
