SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
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 9, 2004
PATRON SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 0-25675 74-3055158
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
841 W AINSLIE STREET, CHICAGO, IL 60604
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (773) 275-1433
THE OAKS - WINDSOR LODGE, 51 MACEWEN DRIVE, UNIT #6, OSPREY, FL 34229
(Former Name or Former Address, if Changed Since Last Report)
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
This Form 8-K/A amends the Current Report on Form 8-K of Patron
Systems, Inc. (the "Registrant") dated January 19, 2004 regarding the
resignation of Grant Thornton LLP ("Grant Thornton") as the Registrant's
independent public accountants. The purpose of this amendment is to address the
reporting requirements under Item 304 of Regulation S-B.
(a) On January 21, 2004, Patron Systems, Inc. (the "Registrant"),
received notification from Grant Thornton of its decision to resign as the
Registrant's independent public accountants, effective immediately.
(b) Grant Thornton's reports on the Company's consolidated financial
statements as of September 30, 2002 and for the period from inception (April 30,
2002) through September 30, 2002 and as of December 31, 2002 and for the period
from inception (April 30, 2002) through December 31, 2002 did not contain an
adverse opinion or disclaimer of opinion and were not qualified as to
uncertainty, audit scope, or accounting principles except such reports did
contain an explanatory paragraph related to the Company's ability to continue as
a going concern. During the Registrant's fiscal period ended December 31, 2002
and through the date of Grant Thornton's resignation, there were no
disagreements with Grant Thornton on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Grant Thornton, would have
caused it to make reference to the subject matter of the disagreement in
connection with its reports. During the Registrant's interim period ending
September 30, 2002, the fiscal period ended December 31, 2002 and the subsequent
interim periods preceding such resignation, there were no "reportable events"
(as that term is defined in Items 304(a)(l)(v) of Regulation S-B) except as
follows:
During the course of reviewing the Company's quarterly unaudited
financial statements on Form 10-QSB in 2003, the Company has on numerous
occasions in 2003 been provided with confirmation letters from an investor,
InterCap Group LLC, committing to $50 million in financing. In reliance on these
documents and other discussions with the investor about such financing,
management has continually believed it has met the conditions precedent to
funding and that the funding would be imminent, having most recently disclosed
in its Form 10-QSB for the quarter ending September 30, 2003 that the funding
would take place no later than January 5, 2004. In its letter of resignation,
Grant Thornton concluded based on background information related to the investor
it had independently obtained and later had been brought to its attention by
management through subsequent discussions, that this background information had
not been brought to Grant Thornton's attention on a timely basis. In its
resignation letter, Grant Thornton indicated that it believed a representation
made by the Company that Hogan & Hartson LLP ("Hogan") had agreed to be
re-engaged as the Company's legal counsel upon payment of outstanding fees was
not factual based upon its on inquires made to Hogan. In addition, Grant
Thornton also indicated that the Company had not been forthcoming with contact
information requested from the Company for an official reference regarding the
background of the investor. These factors, coupled with newly found information
concerning the investor's background, and the fact that the funding had never
occurred as promised by the investor, led Grant Thornton to conclude that it
could no longer rely on Patron's representations and, as a result, Grant
Thornton is unwilling to be associated with the financial statements prepared by
Patron, and accordingly, advised us that Grant Thornton was withdrawing its
audit reports and those audit reports could no longer be relied upon.
Based on the Company's subsequent discussion with a representative of
Hogan, the Company believes its statements made to Grant Thornton regarding its
relationship with Hogan to be true. There was either a miscommunication or
misunderstanding between Grant Thornton and Hogan. In addition, at the time of
Grant Thornton's resignation, the Company was unaware that Grant Thornton had
not been provided with the official reference information for the investor it
had requested.
Lastly, Patron's disclosure of the InterCap funding has been based on
written and verbal communication from InterCap and verified by knowledgeable
third parties. Patron believes the statements made in previous filings and press
releases to accurately and completely describe InterCap's commitments at the
time of each disclosure.
(c) Neither the Company's Board of Directors nor the Audit Committee
recommended or approved the resignation of Grant Thornton. The Company is
engaged in the process of selecting
a new independent accounting firm to audit the Company's financial statements.
The Company has authorized Grant Thornton to respond fully to any inquiries made
by any successor accountants.
(d) The Registrant has furnished Grant Thornton with a draft of the
disclosure contained herein and requested that Grant Thornton furnish to the
Registrant a letter addressed to the Securities and Exchange Commission stating
whether it agrees with such disclosure. Once available, Patron will include a
copy of Grant Thornton's letter to the SEC in a subsequent Current Report filed
on Form 8-K.
ITEM 5. OTHER EVENTS
On February 6, 2004 the Registrant completed discussions with InterCap
Group, LLC (the "Investor") to modify the terms of its proposed equity and debt
financing as reported in Patron's 10-QSB for the quarter ended September 30,
2003. The investor has agreed to three placements of Patron common stock,
consisting of: (i) $5 million of common stock at a price of $0.50 per share or
10 million shares, (ii) $5 million of common stock at a price of $1.00 per share
or 5 million shares and (iii) $5 million of common stock at a price of $1.50 or
approximately 3,333,333 shares. As before, these shares do not have any special
registration rights and funding is not dependent on the closing of any specific
transaction. In addition, the Company granted to the investors an option until
December 31, 2004 to invest an additional $15 million by purchasing up to an
additional 10 million shares of common stock at a price of $1.50 per share. The
option period can be extended by mutual agreement. The net proceeds from the
private placements, after deducting transactional costs, are expected to be
approximately $14 million (not assuming the optional shares). InterCap has
agreed to lock up all shares for a period of three years. Notwithstanding
receipt of this most recent funding commitment, the Company cannot assure that
this funding will be completed. The Registrant intends to use the net proceeds
for acquisitions and general corporate purposes.
Patron, despite delays in funding, is actively pursuing additional
funding alternatives, continues active ongoing acquisition negotiations,
reconstitution of its management team, and, the identification of new
independent board members. Three acquisition candidates, all providers of
Internet security products and services, are awaiting disposition of the funding
to finalize the terms of proposed transactions. Furthermore, Patron has received
favorable indications from several individuals to join Patron as part of the
executive management team and board. Mr. Maris Licis has been appointed Director
of Investor Relations for the Company. Once elected, the Board of Directors will
work to complete a significant reduction in the number of founders' shares and
management options. Patron will issue press releases on a timely basis to inform
shareholders of these events.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PATRON SYSTEMS, INC.
By: /s/ Robert E. Yaw
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Robert E. Yaw
Chairman of the Board
Date: February 9, 2004