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
For the fiscal year ended December 31, 1996
or
[  ] TRANSITION REPORT PURSUANT TO SECTION 14 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

                  Commission File No.  033-92230

                       LEVEL 8 SYSTEMS, INC.
     (Exact name of registrant as specified in its charter)

          New York                         11-2920559
(State or Other Jurisdiction of         (I.R.S. Employer
Incorporation or organization)          Identification No.)

One Penn Plaza, Suite 3401
New York, New York                           10119-0002
(Address  of principal executive offices)    (Zip Code)

                         (212) 244-1234
       (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value

     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 definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [  ]

     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 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 ___.


                             PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on
          Form 8-K

          (a)1.  Financial Statements

          The following consolidated financial statements are
          included in Item 8:

          Independent Auditor's Report

          Consolidated Statements of Operations for the years
          ended December 31, 1996, 1995 and 1994.

          Consolidated Balance Sheets as of December 31, 1996 and
          1995.

          Consolidated Statements of Changes in Shareholders'
          Equity for the years ended December 31, 1996, 1995 and
          1994.

          Consolidated Statements of Cash Flows for the years
          ended December 31, 1996, 1995 and 1994.

          Notes to Consolidated Financial Statements.

          (b)1.  Reports on Form-8K

          On September 9, 1996 the Company filed Form 8-K to
          record the sale of substantially all of the assets of
          Bizware Computer Systems (Canada) Inc.

          2.   Financial Statement Schedule

          The following consolidated financial statement schedule
          is included in Item 14 (b):

          Schedule
          II -  Valuation and Qualifying Accounts.

     Schedules other than those listed above have been omitted
since they are either not required or the information is
otherwise included.








          3.   Listing of Exhibits

          Exhibits

          3.1       Restated Certificate of Incorporation of
                    Registrant (filed as exhibit 3.1 to
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          3.2       By-Laws of Registrant. (filed as exhibit 3.2
                    to Registration  Statement No. 33-92230 on
                    Form S-1 and incorporated herein by
                    reference).
          10.1      1995 Stock Incentive Plan, as amended (filed
                    as exhibit 10.1 to Registration Statement No.
                    333-15455 on Form S-1 and incorporated herein
                    by reference).
          10.2      Stock Purchase Warrant issued by ProfitKey to
                    Fleet Bank-NH for 85,000 shares of common
                    stock of ProfitKey dated January 28, 1992
                    (filed as exhibit 10.2 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.3      Letter of agreement, dated May 14, 1993,
                    between Fleet Bank-NH and ProfitKey (filed as
                    exhibit 10.3 to Registration Statement No.
                    33-92230 on Form S-1 and incorporated herein
                    by reference).
          10.4      Consulting Services Agreement, dated March
                    17, 1994, between Norwest Technical Services,
                    Inc. and Level 8 (filed as exhibit 10.4 to
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          10.5      Letter of Engagement, dated August 16, 1994,
                    between Norwest Mortgage, Inc. and Level 8
                    (filed as exhibit 10.5 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.6      Stock Purchase Agreement, dated September 28,
                    1994 among Liraz, R.W. Allsop & Associates
                    II, L.P., HLM Partners, L.P., Kitty Hawk
                    Capital, Ltd. and the United States Small
                    Business Administration (filed as exhibit
                    10.6 to Registration Statement No. 33-92230
                    on Form S-1 and incorporated herein by
                    reference).
          10.7      Amendment to Stock Purchase Agreement, dated
                    September 29, 1994 among Liraz, R.W.  Allsop
                    & Associates II, L.P., HLM Partners, L.P.,
                    Kitty Hawk Capital, Ltd. and the United 
                    States Small Business Administration (filed 



                    as exhibit 10.7 to Registration Statement No.
                    33-  92230 on Form S-1 and incorporated
                    herein by reference).
          10.8      Letter Agreement, dated February 19, 1995,
                    between Bizware and Joel Leonoff (filed as 
                    exhibit 10.8 to Registration Statement No.
                    33-92230 on Form S-1 and incorporated herein 
                    by reference).
          10.9      Software Acquisition Agreement dated February
                    23, 1995 among SASI, Bizware and  Registrant
                    (filed as exhibit 10.9 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.10     Service Agreement, dated March 31, 1995,
                    between Level 8 and Transaction Information 
                    Systems, Inc. (filed as exhibit 10.10 to
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          10.11     Form of Amended and Restated Contribution
                    Agreement, effective April 1, 1995, among 
                    Registrant and the shareholders of Level 8
                    (filed as exhibit 10.11 to Registration
                    Statement  No. 33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.12     Employment Agreement, effective April 1,
                    1995, between Level 8 and Samuel Somech 
                    (filed as exhibit 10.11 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.12A    Form of Amendment, dated June __, 1995, among
                    Level 8, Registrant and Samuel Somech  (filed
                    as exhibit 10.12A to Registration Statement
                    No. 33-92230 on Form S-1 and incorporated
                    herein by reference).
          10.13     Consulting Agreement, effective April 1,
                    1995, between Level 8 and Theodore Fine
                    (filed as  exhibit to Registration Statement
                    No. 33-92230 on Form S-1 and incorporated
                    herein by  reference).
          10.13A    Form of Amendment, dated June  , 1995, among
                    Level 8, Registrant and Theodore Fine  (filed
                    as exhibit 10.13A to Registration Statement
                    No. 33-92230 on Form S-1 and incorporated
                    herein by reference).
          10.14     Consulting Agreement, dated April 4, 1995,
                    among Bizware and Daimin Investments Ltd.
                    (filed as exhibit 10.14 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated  herein by reference).
          10.15     Employment Agreement, dated May 1, 1995,
                    between Registrant and Arie Kilman (filed as
                    exhibit to Registration Statement No.
                    33-92230 on Form S-1 and incorporated herein
                    by reference).
          10.15A    Amendment to Employment Agreement, dated as
                    of September 18, 1996, between Registrant and
                    Arie Kilman (filed as exhibit 10.14A to
                    Registration Statement No. 333-15455 on Form
                    S-1 and incorporated herein by reference).
          10.15B    Amendment No.2 to Employment Agreement, dated
                    as of December 16, 1996, between Registrant
                    and Arie Kilman (filed as exhibit 10.14B to
                    Registration Statement No. 333-15455 on Form
                    S-1 and incorporated herein by reference).
          10.16     Employment Agreement, dated May 1, 1995,
                    between Registrant and Robert R. MacDonald 
                    (filed as exhibit 10.16 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated  herein by reference).
          10.16A    Amendment to Employment Agreement, dated as
                    of February 21, 1996, between Registrant and
                    Robert MacDonald (filed Exhibits as exhibit
                    10.15A to Registration Statement No.
                    333-15455 on Form S-1 and incorporated herein
                    by reference).
          10.16B    Amendment to Employment Agreement, dated as
                    of July 30, 1996, between Registrant and
                    Robert MacDonald (filed as exhibit 10.15B to
                    Registration Statement No. 333-15455 on Form
                    S-1 and incorporated herein by reference).
          10.17     Employment Agreement, dated May 1, 1995,
                    between Registrant and Joseph J. Di Zazzo 
                    (filed as exhibit 10.18 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.17A    Amendment to Employment Agreement, dated as
                    of October 23, 1996, between Registrant and
                    Joseph J. Di Zazzo  (filed as exhibit 10.18A
                    to Registration Statement No. 333-15455 on
                    Form S-1 and incorporated  herein by
                    reference).
          10.18     Agreement AD/Ventures and Liraz Export
                    Systems Ltd. (filed as exhibit 10.19 to
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          10.19     Standard Program Product License Agreement of
                    ProfitKey (filed as exhibit 10.20 to 
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          10.20     Standard Computer Hardware Purchase Agreement
                    of ProfitKey (filed as exhibit 10.21 to
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          10.21     Standard Software License Agreement of
                    Bizware and Standard Escrow Agreement (filed
                    as exhibit 10.22 to Registration Statement
                    No. 33-92230 on Form S-1 and incorporated
                    herein by reference).
          10.22     Agreement, dated June 13, 1995, between
                    Registrant and Liraz (filed as exhibit 10.23
                    to  Registration Statement No. 33-92230 on
                    Form S-1 and incorporated herein by
                    reference).
          10.23     Registration Rights Agreement, dated June 13,
                    1995 between Registrant and Liraz (filed as 
                    exhibit 1 to Registration Statement 33-92230
                    on Form S-1 and incorporated herein by 
                    reference).
          10.24     Agreement of Purchase and Sale, dated October
                    28, 1994 among Joel Leonoff, Russell 
                    Rothstein, Mitchell Wasserman, Daimin
                    Investments Ltd., 2993031 Canada Inc.,
                    2962594  Canada Inc., 3077934 Canada Inc. and
                    Bizware Computer Systems (Canada) Inc. (filed
                    as exhibit 10.25 to Registration Statement
                    No. 33-92230 on Form S-1 and incorporated
                    herein  by reference).
          10.25     Addendum dated February 14, 1995 among Joel
                    Leonoff, Russell Rothstein, Mitchell 
                    Wasserman, Daimin Investments Ltd., 2993031
                    Canada Inc., 2962594 Canada Inc., 3077934
                    Canada Inc. and Bizware Computer Systems
                    (Canada) Inc. (filed as exhibit 10.26 to 
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          10.26     Form of Warrant Agreement between the
                    Registrant and Hampshire Securities
                    Corporation  for 135,000 shares of common
                    stock (filed as exhibit 10.27 to Registration
                    Statement No.  33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.27     Form of Loan Agreement, dated June __, 1995,
                    between Registrant and Liraz regarding 
                    Registrant's agreement to repay the principal
                    amount of $1,228,172 (filed as exhibit 10.28
                    to  Registration Statement No. 33-92230 on
                    Form S-1 and incorporated herein by
                    reference).
          10.28     Form of Loan Agreement, dated 1995, between
                    Registrant and Liraz regarding Registrant's 
                    agreement to repay the Exhibits principal
                    amount of $628,172 (filed as exhibit 10.29 to
                    Registration  Statement No. 33-92230 on Form
                    S-1 and incorporated herein by reference).
          10.29     Form of exchange agreement dated 1995,
                    between Registrant and Liraz (filed as
                    exhibit to Registration Statement No.
                    33-92230 on Form S-1 and incorporated herein
                    by reference).
          10.30     Consulting Agreement dated May 15, 1995
                    between Registrant and Nellcor Incorporated 
                    (filed as exhibit 10.31 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated  herein by reference).
          10.31     Stock Purchase Agreement dated September 9,
                    1994 by and among Liraz Systems, Ltd., 
                    Richard T. Lilly and the other individuals
                    whose names appear on the signature page
                    thereto (filed as exhibit 10.32 to
                    Registration Statement No. 33-92230 on Form
                    S-1 and incorporated  herein by reference).
          10.32     Exchange Agreement dated September __, 1994
                    between Liraz and the individuals whose 
                    names appear on the signature page thereto
                    (filed as exhibit 10.33 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated herein by reference).
          10.33     Stock Purchase Agreement dated October 17,
                    1994 by and among Liraz and Gary E.  Frashier
                    (filed as exhibit 10.34 to Registration
                    Statement No. 33-92230 on Form S-1 and 
                    incorporated herein by reference).
          10.34     Stock Purchase Agreement dated October  ,
                    1994 by and among Liraz and William Dockins 
                    (filed as exhibit 10.35 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated  herein by reference).
          10.35     Stock Purchase Agreement dated October 24,
                    1994 by and among Liraz and Alfred L. 
                    Whiting (filed as exhibit 10.36 to
                    Registration Statement No. 33-92230 on Form
                    S-1 and  incorporated herein by reference).
          10.36     Certificate of Ownership and Merger of PK
                    Holdings Inc. into ProfitKey International,
                    Inc. dated March 30, 1995 (filed as exhibit
                    10.37 to Registration Statement No. 33-92230
                    on  Form S-1 and incorporated herein by
                    reference).
          10.37     Development Agreement dated July 17, 1995
                    between Microsoft Corporation and Level 8 
                    (filed as exhibit 10.38 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated  herein by reference).
          10.38     Letter Agreement dated June 1, 1995 from Visa
                    International Service Association to Level 8 
                    (filed as exhibit 10.39 to Registration
                    Statement No. 33-92230 on Form S-1 and
                    incorporated  herein by reference).
          10.39     Development Agreement dated December 19, 1995
                    between Liraz and Level 8.
          10.40     Development Agreement dated October 23, 1995
                    between Liraz and ProfitKey.
          10.41     Product Purchase Agreement, dated August 30,
                    1996, between Candle Corporation and Level 8
                    (filed as exhibit 10.40 to Registration
                    Statement No. 333-15455 on Form S-1 and
                    incorporated herein by reference).
          10.42     Investment Agreement, dated July 26, 1996,
                    among Registrant, and Candle Corporation
                    (filed as exhibit 10.41 to Registration
                    Statement No. 333-15455 on Form S-1 and
                    incorporated herein by reference).
          10.43     Candle Corporation Software Agency Agreement,
                    dated October 7, 1996, between Candle
                    Corporation and Level 8 (filed as exhibit
                    10.42 to Registration Statement No. 333-15455
                    on Form S-1 and incorporated herein by
                    reference).
          10.44     IBM Licensing Agreement: NT Client Bridge,
                    dated February 28, 1996, by and between
                    International Business Machines and Level 8
                    (filed as exhibit 10.43 to Registration
                    Statement No. 333-15455 on Form S-1 and
                    incorporated herein by reference).
          11.0      Statement re: computation of per share income
                    (loss) (previously filed).
          21.1      List of Subsidiaries of Registrant (filed as
                    exhibit 21.1 to Registration Statement No.
                    33- 92230 on Form S-1 and incorporated herein
                    by reference).
          23.2      Consent of Lurie, Besikof, Lapidus & Co., LLP
                    (previously filed).
          27.0      Financial Data Schedule.

                            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.


                              Level 8 Systems, Inc.


                              By:  /s/  Arie Kilman  
                                        Arie Kilman
                                        Chief Executive Officer
                                        and Director

Dated:  May 30, 1997

     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 registrants and in the capacities and on
the date indicated.

     Signature                 Title                   Date
          
/s/ Arie Kilman           Chief Executive Officer   May 30, 1997
    (Arie Kilman)         and Director

/s/ Robert R. MacDonald   Chairman of the Board     May 30, 1997
    (Robert R. MacDonald)          
          
/s/ Samuel Somech         President and Director    May 30, 1997
    (Samuel Somech)      
          
/s/ Joseph J. Di Zazzo    Controller, Chief         May 30, 1997
    (Joseph J. Di Zazzo)  Accounting Officer
                          Treasurer and Secretary
          
/s/ Theodore Fine         Director                  May 30, 1997
    (Theodore Fine)      
          
/s/ Lenny Recanati        Director                  May 30, 1997
    (Lenny Recanati)          
          
/s/ Frank J. Klein        Director                  May 30, 1997
    (Frank J. Klein)