SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------
Amendment No. 1
to
FORM 10-K
--------------------

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (Fee Required) For the fiscal year ended December 31, 1998
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required) For the transition period from
___________ to ___________

Commission file number: 0-26394
ACCENT SOFTWARE INTERNATIONAL LTD.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)

Israel N/A
- ----------------------------------- -----------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

C/O Yigal Arnon & Co.
22 Rivlin Street
Jerusalem 91000 Israel
011-972-2-623-9200

(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which Registered
- --------------------------------------------------------------------------------
None --

Securities registered pursuant to Section 12(g) of the Act:

- --------------------------------------------------------------------------------
Ordinary Shares par value NIS .01 per share
Units, consisting of one Ordinary Share and one Warrant to
purchase one Ordinary Share

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in a definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].

Aggregate market value of the voting stock of the registrant held by non-
affiliates of the registrant on March 15, 1999 (computed by reference to the
last reported closing sale price of the Common Stock on the over-the-counter
market on such date): $4.96 million.

On March 15, 1999, the registrant had outstanding 29,291,504 Ordinary Shares
(including 2,000 Ordinary Shares included in the registrant's outstanding
Units).

DOCUMENTS INCORPORATED BY REFERENCE:

Parts I, II and IV from the Company's Form 10-K filed with the Securities and
Exchange Commission on March 30, 1999.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The directors and executive officers of the Company as of the date of this
filing and their respective ages and positions with the Company are set forth
below. The officers hold office until the next Annual Meeting or until their
successors are appointed by the Board of Directors.

Name Age Position
- ---- --- --------

Todd A. Oseth 37 President, Chief Executive Officer
and Director

Esther Dyson 45 Director

Francis Vanderhoydonck 40 Director

Chantal Mestdagh 37 Director

Bob Kutnick 41 Director

Robert V. Antoniazzi 43 Vice President - Marketing

Todd A. Oseth was appointed President and Chief Executive Officer of the Company
on February 6, 1997. He has also served as Chairman of the Company since October
8, 1998. Prior to joining the Company, Mr. Oseth served as Vice President,
Business Development of Sony Information Technologies of America. From 1989 to
1995, he served in various senior managerial capacities, including two years as
President of Enhanced Memory Systems, Inc., a subsidiary of Ramtron
International Corp. He holds a B.S. degree in Electrical Engineering and
Computer Science from the University of Minnesota and an M.B.A. degree from the
University of St. Thomas.

Esther Dyson has served as a Director of the Company since June 1996. Ms. Dyson
has been President of EDventure Holdings, Inc., a diversified holding company
which publishes newsletters and sponsors conferences for the software industry,
for more than the past five years. Ms. Dyson is a member of the advisory boards
of the Software Entrepreneurs Forum, the Poynter Institute for Media Studies,
the Institute for Research on Learning and the Cyberspace Law Institute. Ms.
Dyson is a limited partner of the Mayfield Software Fund. Ms. Dyson is also a
Director of Thinking Tools, Inc.

Bob Kutnick has served as a Director of the Company since July 1998. Mr.
Kutnick currently serves as Senior Vice President of Strategic Business
Development and Chief Technology Officer in the Office of the Chief Executive
for Lernout and Hauspie Speech Products, N.V. ("L&H"). In this role, Mr. Kutnick
is responsible for mergers, joint ventures and acquisitions, development of
technical strategy for future products and markets, and establishing
relationships with strategic partners. Previously, Mr. Kutnick held similar
positions at Quarterdeck Corporation, a utilities and Internet software company,
and AMKLY Systems, Inc., a PC hardware vendor. Prior to AMKLY Systems, he served
as Vice President of Strategic Projects for AST Research, Inc. where he was
responsible for repositioning the company into the systems business from its
original add-on and peripheral focus. Kutnick received a Masters degree in
Computer Information and Control Engineering from the University of Michigan. He
is a well-known industry speaker who has spoken at numerous industry trade shows
and conferences.

Pursuant to a Preferred Stock Purchase Agreement, dated June 4, 1998,
between the Company and L&H, whereby L&H purchased 4,000 Series C Preferred
Shares for $4 million, the signatories agreed, subject to approval by holders of
Ordinary Shares, that the Series C Preferred Shareholders be entitled to vote as
a separate class to elect one (1) director and holders of Ordinary Shares,
voting as a separate class, be entitled to elect remaining directors. Mr.
Kutnick currently serves as L&H's designee to the Company's Board of Directors.

Francis Vanderhoydonck has served as a Director of the Company since March 1999.
Mr. Vanderhoydonck serves as President and Managing Director of Lernout &
Hauspie Investment Company ("LHIC") since its incorporation. Prior to joining
LHIC, Francis Vanderhoydonck worked at the Generale Bank, Belgium's largest
bank, since 1986 where he became the head of Corporate & Investment Banking in
1995.

Chantal Mestdagh has served as a Director of the Company since March 1999. Ms.
Mestdagh joined LHIC at its incorporation as Chief Financial Officer. She was
formerly a Senior Audit Manager at KPMG Belgium where she was the audit manager
for several public companies including Lernout & Hauspie Speech Products, N.V.

Pursuant to a Loan Agreement, dated March 3, 1999, between the Company and
LHIC, the Company agreed that LHIC would be entitled to select two (2)
individuals as interim members of the Company's Board of Directors and that
such members would be presented as nominees at the Company's next Annual General
and Extraordinary Meeting of Shareholders. Mr. Vanderhoydonck and Ms. Mestdagh
currently serve as LHIC's designees to the Company's Board of Directors.

Bob Antoniazzi has been Vice President of Marketing for the Company since June
1997. Prior to joining the Company, he was the Managing Director and Co-founder
of GlobalKey Inc., an Internet-based secure communications technology developer
and provider. In addition, he has served in senior sales, marketing, and
general management positions for several start-up companies to establish their
European offices and operations.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table sets forth information in respect to the compensation
of the Chief Executive Officer and the Company's other most highly compensated
executive officer who had annual compensation in 1998 in excess of $100,000.

Long-Term
Compensation
Awards
---------------
Annual Compensation Number of
----------------------------- Securities
Other Annual Underlying All Other
Year Salary Bonus Compensation Options Compensation
---- -------- ----- ------------ --------------- ---------------

Todd A. Oseth 1998 $199,998 $ - $0 812,000/1/ -
President & CEO 1997 $181,153 $ - $0 350,000/1/ $102,905/2/

Robert V. Antoniazzi 1998 $120,000 $ - $0 45,000 -
Vice President,
Marketing 1997 $ 90,000 $ - $0 40,000 -

- --------------------------------------------------------------
/1/ Options to purchase 812,000 Ordinary Shares were granted to Mr. Oseth by
the Board of Directors subject to the approval by shareholders as required
under Israeli law. Mr. Oseth will forfeit the options to purchase 350,000
Ordinary Shares if the Company's shareholders approve a CEO Share Option
Plan (1999) at the Company's next Annual and Extraordinary Shareholders'
Meeting to be held on or about June 25, 1999.

/2/ Includes reimbursement of expenses associated with the relocation of Mr.
Oseth's household in accordance with his employment agreement.

The following table sets forth information concerning individual grants of
stock options made pursuant to the Company's Employee Share Option Plan (1995)
and CEO Share Option Plan (1999) during 1998 to each of the named executive
officers and the potential realizable value for the stock options based on
future appreciation assumptions. There can be no assurance that the values
shown in this table will be achieved. No stock appreciation rights ("SARs")
were granted in 1998.

Option Grants in 1998

Potential Realizable Value at
Assumed Annual Rates of
Number of % of Total Stock Price Appreciation
Securities Underlying Options Granted Exercise for Option Term/2/
Options Granted to Employees Price Expiration ----------------------
(#) in 1998 ($) Date 5% ($) 10% ($)
-------------- ----------- ------- -------- --------- ----------

Todd A. Oseth 812,000/1/ 47.5% $0.34 5/23/2003 $76,276 $168,550
Robert V. Antoniazzi 45,000 2.6% $0.34 5/23/2003 $4,227 $9,341
- --------------------------

/1/ The options granted to Mr. Oseth in calendar year 1998 by the Board of
Directors to purchase 812,000 Ordinary Shares are subject to the approval
of shareholders of the Company under Israeli law.

/2/ Amounts reported in these columns show hypothetical gains that may be
realized upon exercise of the options, assuming the market price of common
stock appreciates at the specified annual rates of appreciation, compounded
annually over the term of the options. These numbers are calculated based
upon rules promulgated by the SEC. Actual gains, if any, depend on the
future performance of the Company's Ordinary Shares and overall market
conditions.

The following table summarizes for each of the named executive officers,
the total number of unexercised outstanding options to purchase Ordinary Shares
as of December 31, 1998, and the aggregate dollar value of unexercised in-the-
money options to purchase Ordinary Shares, if any, held by them at December 31,
1998. The value of unexercised in-the-money options at fiscal year-end is the
difference between the exercise price of such options and the market value of
the underlying Ordinary Shares at the close of business on December 31, 1998.
Since the exercise price of $0.34 was greater than the December 31, 1998 market
value, which was $0.16 per share, the amounts shown in the table are $0. None of
the named executive officers exercised any options to purchase Ordinary Shares
in 1998.

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options/SARs at Fiscal Fiscal Year-End
Year-End -------------------------
----------------------
Name Exercisable Unexercisable Exercisable Unexercisable

Todd A. Oseth 270,667 541,333 $0 $0
Robert V. Antoniazzi 43,333 15,000 $0 $0

In May 1998, the Company's Board of Directors approved a repricing of all
employee stock options outstanding under the Company's Employee Share Option
Plan (1995). The following table sets forth information concerning the repricing
of stock options held by each named executive officer:

TEN-YEAR OPTION REPRICING IN 1998

Securities Length of
underlying Market price original option
number of of stock at Exercise price New term remaining
options time of at time of Exercise at date of
Name Date repriced (#) repricing ($) repricing ($) price ($) repricing
- ------------------------ ----------- ------------------ ---------------- ----------------- ------------ -----------------

Robert V. Antoniazzi
Vice President Marketing 5/24/98 40,000 $0.34 $1.63 $0.34 3.7 years

Employment Agreements

The Company has an employment agreement with Todd A. Oseth for a three-year
term beginning on February 6, 1997, which is terminable upon three months notice
at the option of the Company. The agreement provides that Mr. Oseth will
receive an annual salary of $200,000, together with employee benefits granted by
the Company to its senior managerial personnel. The agreement contains
provisions prohibiting Mr. Oseth from competing with the Company for a two-year
period following termination of employment and requiring him not to disclose
confidential or proprietary information of the Company for a six-year period
following termination of employment.

Compensation of Directors

All Directors hold office until the next annual meeting of shareholders and
the election

and qualification of their successors. Directors receive no cash compensation
for serving on the Board of Directors other than reimbursement of reasonable
expenses incurred in attending meetings. The Company has also agreed to
reimburse non-employee directors for their reasonable out-of-pocket expenses
incurred in performing various services on behalf of the Company.

In addition, the Company has granted to its non-employee directors options
to purchase Ordinary Shares pursuant to the Company's Non-Employee Share Option
Plan (1998). Under the Non-Employee Share Option Plan (1998), (i) each non-
employee who served as a director of the Company upon adoption of the Non-
Employee Share Plan (1998) automatically received an initial grant of
immediately vested options equal to the number of options which had been granted
under the Non-Employee Share Option Plan (1995), which plan was replaced by the
Non-Employee Share Option Plan (1998) in May 1998, (ii) each non-employee who
served as a director of the Company upon adoption of the Non-Employee Share Plan
(1998) automatically received an initial grant of options to purchase 25,000
Ordinary Shares which vested six (6) months after the date of grant, (iii) each
non-employee who became a member of the Board of Directors after the adoption of
the Non-Employee Share Option Plan (1998) automatically received an initial
grant of options to purchase 50,000 Ordinary Shares, vesting one year from the
date of grant and (iv) upon each anniversary of an initial grant, each non-
employee who served as a director of the Company automatically received an
annual grant of options to purchase 25,000 Ordinary Shares, vesting six months
after the date of grant. Options granted under the Non-Employee Share Option
Plan (1998) are for a five-year term.

As of April 30, 1999, there are 600,000 Ordinary Shares reserved for
issuance under the Company's Non-Employee Share Options Plan (1998). To date,
options to purchase 202,000 Ordinary Shares have been granted under the
Company's Non-Employee Share Option Plan (1998).

Information Concerning the Board of Directors and Board Committees

During 1998 the Board of Directors held 15 meetings and took actions by
unanimous consent 15 times. Mark Tebbe missed 4 meetings while still on the
board, Esther Dyson missed 2 meetings and Bob Kutnick missed 3 meetings after
being appointed to the board. All other members attended all of the meetings.

There were a number of changes to the board within the last year. Roger
Cloutier resigned from the board on October 8, 1998, and Bob Rosenschein and
Mark Tebbe resigned January 26, 1999, to pursue other personal and business
commitments. Bob Kutnick was appointed to the Board on July 30, 1998 as the
Lernout & Hauspie Speech Products representative after its June 1998 investment.
Additionally, Francis Vanderhoydonck and Chantal Mestdagh were appointed on
March 3, 1999 as the Lernout & Hauspie Investment Company representatives after
its March 3, 1999 short-term loan to the Company.

During 1998, the Board of Directors combined its three special committees
into one Executive, Audit and Compensation Committee. The members appointed to
this committee were Roger Cloutier, Esther Dyson and Mark Tebbe. Upon the
resignations of Roger Cloutier and Mark Tebbe, Bob Kutnick was appointed to this
committee.

The current members of the Executive, Audit and Compensation Committee are
Esther Dyson and Bob Kutnick. This committee met one time during 1998 while
Roger Cloutier and Mark Tebbe were still members. The role of the committee is:

1) To be a board level resource for the management of the Company between
formal board meetings and from time to time, to take on other tasks that
were delegated by the full Board.

2) To recommend to the Board independent auditors for the Company, to
review financial statements and transactions between the Company and
interested parties, to analyze and review internal audit procedures and
controls.

3) To determine and review the compensation of the Company's executive
officers, and to establish and review the Company's employee benefit plans
and to present and make recommendations to the Board. To administer the
Company's share option grants and the terms associated with each of the
grants under the Company's share option plans.

The Board of Directors does not have a nominating committee. Nominees for the
Board of Directors are selected by the entire Board.

Compensation Committee Interlocks and Insider Participation

Ms. Dyson and Mr. Kutnick each served as a member of the Compensation and
Share Option Committee. Neither Ms. Dyson nor Bob Kutnick served as a member of
the compensation committee of another entity so as to create any compensation
committee interlock or served as an officer of the Company or any of its
subsidiaries so as to create any insider participation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Set forth below is certain information with respect to the beneficial
ownership of the Company's voting securities as of April 30, 1999 by (i) each
person who, to the knowledge of the Company, is the beneficial owner of more
than 5% of the outstanding Series C Preferred Shares and Ordinary Shares and
Units, all of which comprise the Company's voting securities, (ii) each director
and named executive officer of the Company and (iii) all executive officers and
directors of the Company as a group. As of April 30, 1999, there were 4,000
Series C Preferred Shares outstanding convertible at any time into 8,888,889
Ordinary Shares and 29,291,504 Ordinary Shares outstanding (including 2,000
Ordinary Shares that are part of Units).

Amount and Nature of
Beneficial Ownership
----------------------
Name of Beneficial Owner/1//2/ Number Percent
- ------------------------------ ------ -------

Lernout & Hauspie Speech Products, N.V. ...............
13,333,333/3/ 31.3%
Sint- Krispijnstraat 7
8900 Ieper, Belgium

Amount and Nature of
Beneficial Ownership
----------------------
Name of Beneficial Owner/1//2/ Number Percent
- ------------------------------ ------ -------

Lernout & Hauspie Investment Company 5,871,563/4/ 16.7%
Sint- Krispijnstraat 7
8900 Ieper, Belgium

Todd A. Oseth 890,666/5/ 3.0%

Bob Kutnick 50,000/6/ 0.2%
Sint- Krispijnstraat 7
8900 Ieper, Belgium

Chantal Mestdagh * /7/ 0%
Sint- Krispijnstraat 7
8900 Ieper, Belgium

Francis Vanderhoydonck * /8/ 0%
Sint- Krispijnstraat 7
8900 Ieper, Belgium

Esther Dyson 52,000/9/ 0.2%
Edventure Holdings, Inc.
104 Fifth Avenue
New York, New York 10011

Robert Antoniazzi 171,667/10/ 0.6%

All Executive Officers and Directors as a Group 1,164,333/11/ 3.8%
(6 persons)

- -----------------------------------------------------------------------

/1/ Unless otherwise indicated the address of each beneficial owner identified
is 2864 South Circle Drive, Suite 500, Colorado Springs, Colorado 80906.
/2/ Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all Ordinary
Shares beneficially owned by them. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants or Series C
Preferred Shares convertible into Ordinary Shares that are held by such
person (but not those held by any other person) and which are exercisable
or convertible within 60 days of April 30, 1999 have been exercised or
converted.
/3/ Assumes conversion of 4,000 Series C Preferred Shares into 8,888,889
Ordinary Shares and includes warrants to purchase an aggregate of 4,444,444
Ordinary Shares.
/4/ Includes warrants to purchase 3,000,000 Ordinary Shares; options to
purchase 100,000 Ordinary Shares granted to two of its employees who sit on
the Company's Board of Directors (Ms. Mestdagh and Mr. Vanderhoydonck); and
assumes conversion of debt of $600,000 into 2,771,563 Series C Preferred
Shares which would be convertible at any time into 2,771,563 Ordinary
Shares.
/5/ Includes options to purchase 874,666 Ordinary Shares representing the
exercisable portion of options granted to Mr. Oseth by the Board of
Directors that are subject to shareholder approval.

/6/ Includes options to purchase 50,000 Ordinary Shares. Mr. Kutnick is a
Senior Vice President of and the designee to the Company's Board of
Directors for Lernout & Hauspie Speech Products, N.V. Mr. Kutnick
disclaims beneficial ownership of the equity securities owned by Lernout &
Hauspie Speech Products, N.V.
/7/ Ms. Mestdagh is the Chief Financial Officer of and one of the two designees
to the Company's Board of Directors for Lernout & Hauspie Investment
Company. In connection with being appointed to the Board of Directors, Ms.
Mestdagh was granted options to purchase 50,000 Ordinary Shares, the
options of which have been issued in the name of Lernout & Hauspie
Investment Company in accordance with Belgian law. Ms. Mestdagh disclaims
beneficial ownership of the equity securities owned by Lernout & Hauspie
Investment Company.
/8/ Mr. Vanderhoydonck is the President and Managing Director of and one of the
two designees to the Company's Board of Directors for Lernout & Hauspie
Investment Company. In connection with being appointed to the Board of
Directors, Mr. Vanderhoydonck was granted options to purchase 50,000
Ordinary Shares, the options of which have been issued in the name of
Lernout & Hauspie Investment Company in accordance with Belgian law. Mr.
Vanderhoydonck disclaims beneficial ownership of the equity securities
owned by Lernout & Hauspie Investment Company.
/9/ Includes options to purchase 52,000 Ordinary Shares.
/10/ Includes options to purchase 171,667 Ordinary Shares.
/11/ Includes options to purchase 1,148,333 Ordinary Shares.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On March 3, 1999, L&H Investment Company, N.V. ("LHIC"), an affiliate of
Lernout & Hauspie Speech Products, N.V. which is a beneficial owner of more than
5% of the Company's Ordinary Shares, made a short term loan to the Company in
the amount of $600,000. The loan matures on June 30, 1999 and accrues interest
at an annual percentage rate equal to four (4) percent above the prime rate as
determined by the Wall Street Journal. Upon maturity the principal of the
short-term loan can be converted, at the option of LHIC, into Series C
Preferred Shares of the Company at a price per share of eighty-five percent
(85%) of the average closing bid price of the Company's Ordinary Shares for
twenty (20) trading days prior to March 12, 1999. Accrued interest is due and
payable upon maturity. Additionally, in connection with the short-term loan the
Company issued to LHIC three million warrants to purchase Ordinary Shares of the
Company at a price equal to the average trading price for twenty (20) trading
days prior to March 3, 1999.

The Company believes that the transaction referred to above was on terms no
less favorable to the Company than terms that could have been obtained from
unrelated third parties. Any future transactions between the Company and
affiliated parties will be approved by a majority of the independent and
disinterested directors, and under certain circumstances, by the audit committee
or the shareholders, and will be on terms no less favorable than those that
could have been obtained from unrelated third parties.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

ACCENT SOFTWARE INTERNATIONAL LTD.

By: /s/ TODD A. OSETH
-----------------
Todd A. Oseth, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/ TODD A. OSETH President, Chief Executive Officer April 30, 1999
- ----------------- (principal Executive Officer) and Director
Todd A. Oseth

/s/ ESTHER DYSON Director April 30, 1999
- ----------------
Esther Dyson

/s/ BOB KUTNICK Director April 30, 1999
- ---------------
Bob Kutnick

/s/ FRANCIS VANDERHOYDONCK Director April 30, 1999
- --------------------------
Francis Vanderhoydonck

/s/ CHANTAL MESTDAGH Director April 30, 1999
- --------------------
Chantal Mestdagh