UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 Event Reported): May 18, 2007
PATRON SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-25675 74-3055158
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
5775 FLATIRON PARKWAY, SUITE 230
BOULDER, COLORADO 80301
(Address of Principal Executive Offices/Zip Code)
(303) 541-1005
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange ct (17 CFR 240.14d-2(B))
[_] Pre-commencement communications pursuant to Rule 13e-4(c)) under the
Exchange Act (17 CFR 240.13e-4c))
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Information included in this Form 8-K may contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
information may involve known and unknown risks, uncertainties and other factors
which may cause Patron Systems, Inc.'s actual results, performance or
achievements to be materially different from future results, performance or
achievements expressed or implied by any forward-looking statements.
Forward-looking statements, which involve assumptions and describe Patron
Systems, Inc.'s future plans, strategies and expectations, are generally
identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend" or "project" or the negative of
these words or other variations on these words or comparable terminology.
Forward-looking statements are based on assumptions that may be incorrect, and
there can be no assurance that any projections or other expectations included in
any forward-looking statements will come to pass. Patron Systems, Inc.'s actual
results could differ materially from those expressed or implied by the
forward-looking statements as a result of various factors. Except as required by
applicable laws, Patron Systems, Inc. undertakes no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A
RELATED AUDIT OR COMPLETE INTERIM REVIEW.
On May 18, 2007, the Board of Directors of Patron Systems, Inc. (the "Company")
determined that certain amounts reported in its audited financial statements for
the year ended December 31, 2006 need to be restated as described below.
While performing their review of the Company's financial statements for the
three months ended March 31, 2007, Marcum & Kliegman LLP ("M&K"), the Company's
independent registered public accounting firm, discovered that there may be an
error in the Company's accounting for a deemed dividend it recorded during the
fourth quarter of its year ended December 31, 2006. M&K informed the Company's
management of the possible misstatement. Upon review of this transaction the
Company's management specifically determined that there was an error in the
accounting for a deemed dividend that was recognized upon a reduction in the
conversion price of the Company's Series A Preferred Stock that occurred on
November 16, 2006. The reduction in the conversion price occurred upon the
Company's issuance of additional convertible securities featuring a conversion
price lower than the conversion price embedded in the Series A Preferred. The
Company, in calculating the deemed dividend, originally determined that the net
loss available to its common stockholders should be increased by $589,175. The
Company reevaluated its computations during the quarter ended March 31, 2007 and
determined that the net loss available to its common stockholders should have
been increased by $3,759,059. The nature of the adjustment relates to the
Company's use of an incorrect price for the value of its common stock when it
computed the intrinsic value of the conversion feature embedded in the Series A
Preferred stock at the time of the reduction in the conversion price.
The effect of the restatement on the Company's previously issued audited
consolidated financial statements is as follows:
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As Previously As
Reported Restated
------------- -------------
Additional paid in capital ................... $ 100,573,227 $ 103,743,111
Accumulated deficit .......................... (93,286,542) (96,456,426)
Preferred stock deemed dividend .............. $ (2,413,606) $ (5,583,490)
Net loss available to common stockholders .... $ (9,344,431) $ (12,514,315)
Net Loss Per Share - Basic and Diluted
- Continuing operations .................... $ (0.98) $ (1.41)
- Discontinued operations .................. (0.29) (0.29)
------------- -------------
- Total Net Loss per share available to
common stockholders ................... $ (1.27) $ (1.70)
============= =============
The effect on the Company's financial statements for the year ended December 31,
2006 was to increase additional paid in capital, accumulated deficit and net
loss available to common stockholders by $3,169,884, net loss per share for
continuing operations by $0.43 and total net loss per share available to common
stockholders by $0.43. There was no effect on the Company's net loss.
The Company's management and Board of Directors concluded that the previously
issued audited financial statements for the year ended December 31, 2006 should
no longer be relied upon. The Company will be filing an amendment to its Annual
Report on Form 10-KSB for year ended December 31, 2006 to reflect the
restatement discussed above as soon as practicable.
The Company's management and the Board of Directors have discussed their
findings and conclusions relating to these adjustments with M&K.
The information in this report shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except as shall be expressly set forth by
specific reference in such a filing.
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SIGNATURE
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.
PATRON SYSTEMS, INC.
Date: May 18, 2007 By: /S/ MARTIN T. JOHNSON
---------------------------------
Martin T. Johnson
Chief Financial Officer
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