Infinium Labs incurs penalties related to December 2004 private placement

By Sheri Kasprzak

New York, Oct. 28 - Infinium Labs, Inc. said it has incurred penalties related to a registration statement that was not declared effective from a December 2004 private placement.

Infinium said in a form 8-K filed with the Securities and Exchange Commission Friday that it had filed a registration statement connected to its $2.16 million convertible debenture offering completed Dec. 16, 2004, but the registration statement was never declared effective.

"As a result, we became subject to contractual penalties in favor of the investors generally beginning 120 days from consummation of the financings," said the report filed with the SEC. "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.

"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."

The 8% debentures mature on Dec. 16, 2005.

Infinium is a Sarasota, Fla.-based company that produces video game consoles.

On Friday, the company's stock slipped $0.0026 to close at $0.0254.

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