Phantom Entertainment

Infobox_Company
company_name = Phantom Entertainment
company_
company_type = Public (pinksheets|PHEI)
foundation = 2002
location = Seattle, Washington
key_people = John Landino, CEO
Tim Roberts, Chairman of the Board
num_employees = 3, as of July 2007 [cite web | url=http://arstechnica.com/articles/culture/true-infinium-stories-the-73-million-phantom.ars | title = True Infinium stories: the $73 million (and counting) Phantom disaster | first = Nate | last = Anderson | date = 2007-06-03 | accessdate = 2008-10-01]
revenue = None, development stage company
industry = Video game consoles and peripherals
products = Phantom Lapboard
Phantom Gaming Service

Phantom Entertainment, Inc (pinksheets|PHEI), formerly known as Infinium Labs, is a company that was supposedly developing a new video game console called the Phantom, which went through several supposed revisions before being cancelled in February 2006. In September 2006, the company, which by then had changed its name from Infinium Labs [cite web | url=http://www.engadget.com/2006/07/19/infinium-changes-name-to-phantom-entertainment/ | title = Infinium changes name to Phantom Entertainment | first = Darren | last = Murph | date = 2006-07-19 | accessdate = 2008-10-01] , promised to introduce its "Lapboard" product in November 2006, with a gaming service to follow in March 2007. [cite web | url = http://www.extremetech.com/article2/0,1558,2015342,00.asp?kc=ETRSS02129TX1K0000532 | title = Surprise! Phantom Delays Game Service Again | date = 2006-09-12 | accessdate = 2008-10-01] On June 21, 2008, the company began taking orders for, and shipping, their Lapboard product.

Infinium was founded by Tim Roberts in 2002. Roberts left the company in the summer of 2005 with millions of shares of stock, but before any products had been delivered. He later rejoined as Chairman of the Board but resigned in July 2007 to pursue other opportunities. Subsequent CEOs include Kevin Bachus (who took the post in August 2005), Greg Koler (in January 2006 [cite news | url = http://www.next-gen.biz/index.php?option=com_content&task=view&id=1696&Itemid=2 | title = Bachus Quits Infinium | first = Christian | last = Svensson | date = 2005-11-21|accessdate = 2006-07-23 ] ) and John Landino, who was appointed CEO and Interim Chief Financial Officer in July 2008. [cite web | url = http://www.sec.gov/Archives/edgar/data/1145019/000114420408042568/v121234_8k.htm | title = SEC - Form 8k - Resignation of Greg Koler | date = 2008-07-29 | accessdate = 2008-09-05 ]

Although the Phantom product did not reach manufacture, computer company Alienware did order a shipment of Lapboards for inclusion with a line of media center PCs. Supposedly for release in February 2007, the company stated in December that Phantom could not meet their delivery needs and they would not be carrying the product. [cite web | url = http://www.crunchgear.com/2007/12/27/alienware-no-longer-carrying-phantom-lapboard/ | title = Alienware no longer carrying Phantom Lapboard | first = John | last = Biggs | work = CrunchGear | date = 2007-12-27 | accessdate = 2008-10-01]

In August 2007 Phantom Entertainment signed a deal with ProGames network to provide Lapboards and "Game Service Content" in hotels worldwide. [cite web | url = http://home.businesswire.com/portal/site/home/index.jsp?ndmViewId=news_view&ndmConfigId=1000001&newsId=20070822005741&newsLang=en | title = Phantom Entertainment Signs with ProGames Network to Place Phantom® Lapboard and Game Service Content in Hotels Worldwide | work = BusinessWire | date = 2007-08-22 | accessdate = 2007-08-23 ]

Legal controversies

HardOCP lawsuit

Steve Lynch wrote a less-than-positive report [cite news | title = Behind the Infinium Phantom Console | url = http://www.hardocp.com/article.html?art=NTEy | first = Steve | last = Lynch | work = HardOCP | date = 2003-09-17 | accessdate = 2006-07-23 ] on the company and its founder that was posted in September 2003 at HardOCP, a computer hardware news website.

On February 19, 2004, Infinium Labs' lawyers sent a cease and desist letter to the editor of HardOCP demanding the news site take down the article, claiming it "painted a portrait of a company intent on swindling the public", and threatening to file a defamation suit. Rather than concede to the demands, HardOCP owner Kyle Bennett filed a lawsuit for a declaratory judgement stating that they had done nothing wrong. [cite web | url = http://www.gamesindustry.biz/articles/hardocp-takes-legal-action-against-infinium | title = HardOCP takes legal action against Infinium | first = Rob | last = Fahey | date = 2004-03-04 | accessdate = 2008-10-01] Infinium Labs then filed suit in Florida and denied jurisdiction was proper in Texas, even though they had previously maintained a staffed office in Richardson, Texas (which had by then been closed). [cite web | url = http://news.spong.com/article/6936/Infiniums_Kevin_Bachus_Accused_of_Lying_to_US_Courts?cb=446 | title = Infinium’s Kevin Bachus Accused of Lying to US Courts | date = 2004-06-15 | accessdate = 2008-10-01]

In September 2004, the judge on the case ruled that Infinium Labs must produce several financial documents (including Roberts' personal income tax returns) by the end of the month. Infinium failed to produce the required documents and subsequently faced a court order compelling them to do so. They were informed that sanctions would be awarded to KB Networks and Kyle Bennett in an amount to be determined by the court, later reported to have been $50,000. [cite web | url = http://google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=3697861&SessionID=47aiWHH8YxwBeA7 | title = Infinium Labs, Inc. Form 10-QSB | accessdate = 2008-10-01] In settlement, Infinium Labs dropped the co-pending Florida suit but it was claimed that HardOCP's owners and parent company KB Networks had to pay over $200,000 in legal fees to reach that conclusion.

Other controversies

In October 2005, it emerged that the Securities and Exchange Commission had given notice to Tim Roberts that charges were being planned against him for violating unspecified federal securities laws. [cite news | url = http://www.gamespot.com/news/6136934.html | title = Phantom maker in hot water with SEC | first = Brendan | last = Sinclair | publisher = GameSpot | date = 2005-10-31|accessdate = 2006-07-23 ] In its statement on the notice, Infinium stated that they were not notified of the specific charges but that it suspected they were related to an SEC investigation of unlawful promotion of penny stocks (which had included Infinium's) [cite web | url = http://www.secinfo.com/d12TC3.z1Z9x.htm | title = Infinium Labs Inc · 8-K · For 10/20/05 | work = Form 8-K | publisher = Infinium Labs | date = 2005-10-20 | accessdate = 2008-10-01]

It was further revealed that while Tim Roberts was CEO of Infinium, the company failed to report a large amount of interest and penalties on unpaid payroll taxes. [cite web | url = http://uk.gamespot.com/news/6136934.html | title = Phantom maker in hot water with SEC | first = Brendan | last = Sinclair | publisher = Gamespot | date = 2005-11-01 | accessdate = 2008-10-01] From its inception Infinium had consistently reported very small amounts of cash on hand and large (and growing) debt.

In January 2006 Infinium Labs reached an agreement to borrow up to $5,000,000 from the Golden Gate Investors group to finance the manufacturing process of the Phantom Lapboard, which was scheduled for release later that year. If fully exercised, this would have been the largest amount of money Infinium Labs had ever borrowed at once. The loan would have been repaid over three years, with the option to repay with shares of common stock. [cite news | url = http://www.1up.com/do/newsStory?cId=3147455 | title = Infinium Bags $5 Million | first = Patrick | last = Klepek|date = 2006-01-25 | accessdate = 2006-07-23 ]

In February 2006 Gamespot reported that the Phantom Entertainment was putting the Phantom Game Service on hold in favour of development of the Lapboard. An SEC filing also showed losses in excess of $62.7 million over three years, over half of which was spent on marketing the company and products which were never released. Over $24 million was spent on salaries and consultants, but only $2.5 million on development. Infinium claimed they still intended to release the Lapboard if their financial situation improved. [cite news | url = http://www.gamespot.com/news/6144631.html | title = Infinium opens the books | first = Brendan | last = Sinclair | publisher = GameSpot|date = 2006-02-21 | accessdate = 2006-07-23 ] The "Lapboard" repeatedly missed release dates of the second quarter of 2006, October 2006 and November 2006.

On August 15, 2006, Phantom Entertainment removed all references to the Phantom Game Receiver from its website. They continued to claim that the content delivery system targeted for the Phantom would be made available for PCs running Microsoft Windows XP / Media Centre [cite web | title = Phantom console disappears | url = http://www.theinquirer.net/default.aspx?article=33737 | publisher = The Inquirer | date = 2006-08-16] , and later indicated this service would be available in March 2007, following the release of the Lapboard in November 2006. [cite news | url = http://www.extremetech.com/article2/0,2845,2015342,00.asp | title = "Surprise! Phantom Delays Game Service Again" | date = 2006-09-12 | accessdate = 2008-10-01]

EC Allegations and Subsequent Settlement

On May 16, 2006, the SEC accused Timothy Roberts of running a pump and dump financial fraud scheme.

Among the major allegations was that, in late 2004, Roberts paid a promoter to send thousands of junk faxes falsely claiming that Infinium Labs planned to launch the 'Phantom' system in January 2005. The resulting buzz drove Infinium Labs' stock up. Roberts paid the promoter in $200,000 of company money and 4 million shares of restricted stock, without registering the transfer with the SEC. Roberts also sold more than 1.3 million shares of his own stock, often without reporting the transactions with the SEC, making a profit of $422,500. Both activities violate federal securities laws.

The SEC asked the U.S. District Court in Orlando, Florida "to force Roberts to surrender those proceeds, pay a civil penalty and be prohibited from ever again serving as an officer or director of a public company or participating in any offering of penny stock." [cite news | url = http://money.cnn.com/2006/05/16/technology/infinium/index.htm | first = Christ | last = Morris | title = 'Phantom' video game CEO charged with pump and dump scheme | date = 2006-05-16 | accessdate = 2008-10-01]

On September 19, 2008, the SEC settled the charges with Tim Roberts. As part of the settlement, Roberts agreed to be barred from serving as an officer or director of any public company for five years, to be barred from participating in any offering of penny stock for five years, and to pay a $30,000 civil penalty. [cite news | url = http://www.tradingmarkets.com/.site/news/Stock%20News/1896709/ | title = ENFORCEMENT PROCEEDINGS - SEC Settles Charges With Video Game Executive | work = The Connors Group, Inc | date = 2008-09-22 | accessdate = 2008-10-01]

References