SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/Amendment 3
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) February 14, 2002
eSAFETYWORLD, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
0-29511 11-3496415
(Commission File Number) (IRS Employer Identification Number)
80 Orville Drive
Bohemia, New York 11716
(Address of principal executive offices)
(631) 244-1454
(Registrant's telephone number, including area code)
Item 4. Changes in Registrant's Certifying Accountant
(a) Previous independent accountants
--------------------------------
(i) On February 14, 2002, Eichler Bergsman & Co., LLP ("Eichler")
advised eSAFETYWORLD, Inc. ("Registrant") that it was resigning as Registrant's
auditors (in a letter to Registrant reprinted below and filed as an exhibit
hereto).
(ii) Eichler's letter stated: "Please be advised that our decision is
based on business reasons and not because of a disagreement with management
regarding accounting principles."
(iii) Subsequently, Registrant received letters from Eichler (reprinted
below and filed as exhibits hereto) referring to, among other things,
"disagreements."
(iv) The report of Eichler on the Registrant's fiscal 2001 and 2000
financial statements contained no adverse opinion, disclaimer of opinion or
modification of the opinion.
(b) Letters from Eichler
(i) Eichler's First Letter dated February 14, 2002
A letter to Registrant dated February 14, 2002 ("Eichler's First Letter") from
Eichler, stated in its entirety as follows:
"We are hereby resigning our appointment as auditors for the
company. Please be advised that our decision is based on
business reasons and not because of a disagreement with
management regarding accounting principles.
Respectfully,"
(ii) Eichler's Second Letter dated February 15, 2002
A letter to Registrant dated February 15, 2002 ("Eichler's Second Letter") from
Eichler, stated in its entirety as follows:
"This is in response to your telefax this morning of a draft
8-K. We believe that the disclosures in your letter are
inadequate. We call your attention to subparagraph (iv) and
(v) of 304(a)(i) of Regulations 229.304. The draft 8-K does
not comply with these subparagraphs.
(1) For example, for the June 30, 2001 annual year report we
required changes in income recognition so as to comply with
our understanding of acceptable accounting principles.
Clearly, if such changes had not been resolved in accordance
with our requirements, we would have then resigned or made
reference to the subject matter of such disagreement giving
an adverse opinion in our report,
(2) On February 11, 2002, we received trial balances,
schedules, and a draft 10-Q for the December 31, 2001 second
quarter. We had disagreements regarding the amount shown for
goodwill, deferred contract costs (i.e., work in process),
and loans, advances, and investments to individuals and
companies related to insiders. While allowances and reserves
for these items were increased, our concerns about these
items contributed to our decision to resign and should be
mentioned in the 8-K.
(3) Our letter to the Company's Audit Committee dated
November 21, 2001 was delivered to you without our having
received a copy of the NASD letter notifying you of the
NASD's intention to delist the Company. The NASD letter is
dated November 5, 2001 and we first received a copy of it on
February 12, 2002. We withdraw out letter of November 21,
2001 and require that you so notify your Audit Committee.
Your response in the 8-K must note that one of the reasons
for our resignation is that (1) your securing the November
21, 2001 letter from us without disclosing to us the NASD
letter of November 5, 2001 and (2) your filing Form 12b-25
with estimates of revenues and net income from the June 30,
2001 fiscal year without first discussing with us the
disclosure of such estimates has led us to conclude that we
can no longer rely on management's representations. See
subparagraph 2(B) and 2(D) of the aforesaid regulation.
Respectfully,"
(iii) Eichler's Third Letter dated February 27, 2002
A letter to the Securities and Exchange Commission dated February 27, 2002
("Eichler's Third Letter") from Eichler (a copy of which was sent to Registrant
by Eichler), stated in its entirely as follows:
"We have previously submitted a letter dated Feb. 15, 2002 to
our former client, eSAFETYWORLD, Inc. (the "Company") after
their forwarding to us a draft copy of Form 8-K, that the
Company intended to file with the SEC regarding the change of
accountants. A copy of that letter is attached. In that letter
to the Company we stated that we believed that the disclosures
in the draft 8-K (copy attached) were inadequate and did not
explain our disagreements and reasons for our resignation in
accordance with subparagraph (iv) and (v) of 304(a)(i) of
Regulation 229.304. The following elaborates on the four
concerns in that letter.
First, the 8-K did not reflect that if the changes we required
in income recognition with respect to the June 30, 2001 annual
report concerning complete reductions in the recognition of
consulting fee income from other companies had not been made
in accordance with our requirements, we would have then
resigned or made reference to the subject matter of such
disagreement giving an adverse opinion in our report. This
disclosure is required in the 8-K in accordance with
subparagraph (iv) of the Regulation.
Second, with respect to the Company's December 31, 2001 second
quarter we received the Company's trial balances, schedules
and a draft 10-Q on February 11, 2002. Upon reviewing this
material we had disagreements regarding the amount shown for
goodwill ("Acquired Intangible"), deferred contract costs and
loans and advances to related individuals and investments in
companies related to insiders. If the Company had not then
agreed to substantially increase the allowances and reserves
for these items, we would have then resigned. Notwithstanding
the increased reserves for these items, our continuing
concerns about these items contributed to our subsequent
decision to resign. This disclosure is required to be set
forth in the 8-K in accordance with subparagraph (iv) of the
Regulation.
Third, our letter to the Audit Committee, dated November 21,
2001 (copy attached) was delivered to the Company without our
having received a copy of the NASD letter of November 5, 2001
(copy attached) that notified the Company of the NASD's
intention to delist the Company. Our firm first received the
November 5, 2001 letter on February 12, 2002. In our February
15, 2002 letter to the Company we stated that the November 21,
2001 letter is withdrawn and that the Company's Audit
Committee should be notified of our action. The Company's
action in securing from us the November 21, 2001 letter
without disclosing to us the NASD letter of November 5, 2001
is one of the primary reasons for our resignation and should
be disclosed in the 8-K as required by subparagraph (v) of the
Regulation.
Fourth, we did not see in advance or participate in the
preparation of the Company's filing of the Form 12b-25 on
September 28, 2001. In that filing, the Company included
amounts for revenues and net income for the June 30, 2001
fiscal year without first discussing with us the disclosure of
such amounts. Those amounts were first presented to us in
trial balance and schedules, and then in a draft 10-K received
approximately two days before the 12b-25 filing. Beginning
shortly before September 28, 2001 we were beginning to
question the Company's income recognition policy as it
effected revenues and net income. For the 10-K filing we
required substantial reductions in revenues and resultant net
income, and would have then resigned if such reductions had
not been made. We only learned that the 12b-25 contained the
revenue and net income amounts when we read the reference to
them on page 6 of the NASD letter of November 5, 2001 received
by us on February 12, 2002. The failure to earlier disclose to
us these amounts in that filing is another primary reason for
our resignation. This disclosure is required under
subparagraphs (iv) and (v) of the Regulation.
Based on the above we concluded that we can no longer rely on
management's representations and that the foregoing should be
disclosed in the 8-K.
Respectfully,"
(c) While Registrant did not consider the items referred to in Eichler's Second
Letter or Third Letter as the subject matter of disagreements, particularly in
light of Eichler's First Letter, Registrant has authorized Eichler to respond
fully to the inquiries of Registrant's successor accountant with respect
thereto. The matters referred to in Eichler's Second Letter and Third Letter
were not the subject of discussion between Registrant's Audit Committee or Board
of Directors and Eichler.
(d) Additionally, Registrant notes that prior to Eichler sending its November
21, 2001 letter (filed as an Exhibit hereto), referred to in paragraph (3) of
Eichler's Second Letter and paragraph third of Eichler's Third Letter, Eichler
was on notice that Registrant had received the NASDAQ Staff Determination dated
November 5, 2001 concerning delisting.
(e) New independent accountants
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Registrant engaged Feldman Sherb & Co., P.C. ("Feldman Sherb") as its new
independent accountants as of February 14, 2002. During the two most recent
fiscal years and through February 14, 2002, Registrant did not consult Feldman
Sherb regarding (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 Registrant's consolidated financial statements, and no
written or oral advice was provided to Registrant that was an important factor
considered by Registrant in reaching a decision as to an accounting, auditing or
financial reporting issue; or (ii) any matter that was either the subject of a
"disagreement" or "event" referred to in Eichler's Second Letter or Third
Letter.
(f) Exhibits
16.1 Letter from Eichler Bergsman & Co., LLP dated February 14, 2002
16.2 Letter from Eichler Bergsman & Co., LLP dated February 15, 2002
16.3 Letter from Eichler Bergsman & Co., LLP dated November 21, 2001
16.4 Letter from Eichler Bergsman & Co., LLP dated February 27, 2002
16.5 Letter from Eichler Bergsman & Co., LLP dated March 12, 2002
16.6 Letter from Feldman Sherb & Co., P.C. dated March 14, 2002
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this third amendment to be signed on its behalf by
the undersigned hereunto duly authorized.
eSAFETYWORLD, INC.
/s/ R. Bret Jenkins
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Name: R. Bret Jenkins
Title: Chief Financial Officer
Date: March 14, 2002