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
INFINIUM
LABS, INC.
(Exact
name of Registrant as Specified in its Charter)
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Delaware
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65-1048794
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(State
or Other Jurisdiction of
Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification
No.)
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1191
Second Avenue, 5th Floor, Seattle WA 98101
(Address
of Principal Executive Offices) (Zip Code)
Registrant's
telephone number, including area code (206)
393-3000
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:
rWritten
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
r
Soliciting material pursuant to Rule 14a-2 under the
Exchange Act (17 CFR 240.14a-2)
r
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
r
Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section
4 - Matters Related to Accountants and Financial
Statements
Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit
Report or Completed Interim Review.
On
October 20, 2005, our Board of Directors determined that our previously
issued 2004 audited financial statements and current year first quarter and
second quarter interim financial statements should not be relied upon because
they contain errors as addressed in Accounting Principles Board Opinion No.
20
and authorized Kevin Bachus, our president and chief executive officer, to
restate and amend such filings. The errors relate to our failure to record
(i)
sufficient loss contingency accruals to cover possible monetary penalties
and
interest relating to our failure to file certain payroll and withholding
tax
returns and to satisfy required withholding and payroll tax obligations,(ii)
a
loss contingency accrual to cover possible monetary damages associated with
a
breach of a contractual registration commitment and (iii) an expense accrual
for
triggering of dilution protection provisions in warrants issued in connection
with a convertible debt financing. The item referred to in clause (i) above
affects all referenced periods, and the other items affect only the current
year
second quarter period.
We
recorded accrued payroll and payroll taxes of $834,682 at December 31, 2004
and
$1,225,903 at June 30, 2005. These amounts did not include interest and
penalties. As a result, we believe that the recorded amounts should have
been
approximately double that which was actually recorded.
In
connection with convertible debt financings in December 2004 totaling
$2,160,000, we agreed to cause a resale registration statement related to
the
underlying shares to be declared effective with the Securities and Exchange
Commission within an agreed upon time frame. The registration statement was
filed but not declared effective, and was subsequently withdrawn by us. As
a
result, we became subject to contractual penalties in favor of the investors
generally beginning 120 days from consummation of the financings. The penalties
are calculated at the rate of 2% of the investment amount for each month
during
which the registration is not declared effective beyond the initial 120-day
period (prorated for partial months). In connection with these financings,
we
also issued warrants which included provisions to protect against dilution
under
certain circumstances. During the second quarter of the current year, we
triggered those provisions but failed to recognize an associated
expense.
Our
management has discussed the matters disclosed herein with representatives
of
our independent registered public accounting firm, Webb & Company. On
October 20, 2005 Webb & Company advised us that it believes that disclosure
should be made or action should be taken to prevent future reliance on the
audit
report contained in our Annual Report on Form 10-KSB for the year ended December
31, 2004 and the interim review in connection with our Quarterly Reports
on Form
10-QSB for the quarters ended March 31, 2005 and June 30, 2005. Webb &
Company has been provided with a copy of the disclosure contained in this
report
and, in accordance with SEC rules, has been asked to provide us with a letter
indicating whether it agrees with the statements made herein and, if not,
stating the respects in which it does not agree. Upon receipt of such a letter,
we will promptly amend this report to include the same as an
exhibit.
Accordingly,
we intend to amend the above-referenced reports to reflect the required
accounting adjustments.
Section
8 - Other Events
Item
8.01 Other Events.
Mr.
Roberts resigned as our CEO and Acting CFO in August 2005. As disclosed at
that
time, in connection with his resignation and prior to Mr. Bachus assuming
his
new executive role and directorship, we entered into a separation and release
agreement with Mr. Roberts under which we agreed to make certain equity and
monthly cash payments to Mr. Roberts, as well as to indemnify Mr. Roberts
for
certain matters. We have not made any cash payments to Mr. Roberts under
the
agreement or otherwise since his resignation.
SIGNATURES
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 on this 28th day of October 2005.
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INFINIUM
LABS, INC. |
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By: |
/s/
Kevin
Bachus
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Name: Kevin Bachus |
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Title:
President, CEO and
CFO
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