1
................................................................................
SEC 873 (10/2000) POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF
INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO
RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB
CONTROL NUMBER.
................................................................................
------------------------------------
OMB APPROVAL
------------------------------------
------------------------------------
OMB NUMBER: 3235-0060
EXPIRES: MARCH 31, 2003
ESTIMATED AVERAGE BURDEN HOURS PER
RESPONSE........................1.25
------------------------------------
UNITED STATES
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
Date of Report (Date of earliest reported) May 7, 2001 (May 3, 2001)
------------------------------------
EMERGENT INFORMATION TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 0-23585 33-0080929
- -------------------------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
4695 MacArthur Court, Eighth Floor, Newport Beach, California 92660
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 975-1487
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
2
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
(a) Previous Independent Accountants
On May 3, 2001, Emergent Information Technologies, Inc. (the
"Registrant") dismissed KPMG LLP ("KPMG") as its independent accountant.
The reports of KPMG on the Registrant's financial statements for the
past two fiscal years contained no adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
The Registrant's Audit Committee approved the decision to change
accountants on May 3, 2001.
In connection with its audits for the two most recent fiscal years and
through May 3, 2001, there have been no disagreements with KPMG 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
KPMG would have caused them to make reference thereto in their report on the
financial statements for such years.
During the two most recent fiscal years and through May 3, 2001, except
as described below there have been no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)). KPMG informed the Company in a letter dated
April 22, 2000 that the following material weaknesses existed during fiscal year
1999:
- With respect to the Registrant's financial accounting structure,
the Registrant did not have a dedicated Chief Financial Officer;
the Registrant had a shortage of accounting personnel and
retained personnel lacked the appropriate expertise; and the
Registrant was utilizing a large number of temporary accounting
personnel.
- The accounts audited by KPMG included accounting entries that
evidenced overrides by the Registrant's management personnel,
indicating a bypassing of appropriate checks and balances.
- The Registrant's internal controls displayed a weakness in its
control environment, including a lack of appropriate procedures.
- The Registrant's contract management process was not optimized
or properly tracked for accounting purposes, and its contract
billing process was flawed.
- The Registrant had failed to establish procedures for
appropriate purchase accounting review after completion of
acquisitions of assets or other companies.
- The Registrant had failed to apply appropriate rules on revenue
recognition for at least two contracts, resulting in several
adjustments to revenue recognized during the audit of the 1999
financial statements.
- The Registrant had inappropriately capitalized software
development costs, resulting in adjustments regarding software
development costs during the audit of the 1999 financial
statements.
These conditions did not result in any disagreements or differences in
opinion between the Registrant and KPMG.
In a letter dated April 20, 2001 KPMG informed the audit committee that
reportable conditions existed during fiscal year 2000 relating to:
- The Registrant operated at times with an insufficient accounting
staff at Emergent - East, which constrained its ability to
process and analyze accounting information on a timely basis.
- In some instances, the Registrant's contract or accounting
personnel did not have an adequate understanding of the
valuation status of contracts; significant adjustments were
required to properly account for unbilled balances; and the
Registrant was not able to provide explanations regarding
unbilled balances.
These conditions did not result in any disagreement or difference in
opinion between the Registrant and KPMG.
The Registrant has requested that KPMG furnish it with a letter
addressed to the SEC stating whether or not it agrees with the above statements,
and if not, stating the respects in which it does not agree. A copy of such
letter is attached hereto as Exhibit 16 and is incorporated herein by reference.
(b) New Independent Accountants
3
At a meeting held on May 3, 2001, the Board of Directors approved the
engagement of Ernst & Young, LLP ("E&Y") as its new independent accountant, for
the fiscal year ending December 31, 2001 to replace KPMG. During the two most
recent fiscal years and through May 3, 2001, the Registrant has not consulted
with E&Y regarding either (i) the application of accounting principles to a
specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Registrant's financial statements; or (ii)
any matter that was either the subject of a disagreement, as that term is
defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to
Item 304 of Regulation S-K, or a reportable event, as that term is defined in
Item 304(a)(1)(v) of Regulation S-K. The Registrant has authorized KPMG to
respond fully to any inquiries from E&Y relating to its engagement as
Registrant's independent accountant.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
None
(c) Exhibits.
16. Letter from KPMG, LLP regarding Change in Certifying Accountant.
4
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.
EMERGENT INFORMATION TECHNOLOGIES, INC.
---------------------------------------------
(Registrant)
Date May 7, 2001 /s/ Cathy L. Wood
-------------------- ---------------------------------------------
(Signature)*
By: Cathy L. Wood
Chief Financial Officer
*Print name and title of the signing officer under his signature.
5
EXHIBIT INDEX
Number Description
- ------ -----------
16 Letter from KPMG, LLP regarding Change in Certifying Accountant.