Phantom Entertainment
| Infinium Labs Logo | |
| Company type | Public |
|---|---|
| Industry | Video game consoles and peripherals |
| Founded | 2002 |
| Headquarters | Seattle, Washington, Sarasota, Florida |
Key people | Greg Koler, CEO Tim Roberts, Chairman of the Board |
| Products | The Phantom gaming console The Phantom Lapboard Phantom Gaming Service |
| Revenue | None, development stage company |
Number of employees | 5, as of May 2006 |
Infinium Labs is a company that was to develop a new video game console called the Phantom, which went through several revisions before being put on hold indefinitely in February 2006. Infinium was founded by Tim Roberts in 2002. Tim Roberts left the company in the summer of 2005 with millions of shares of stock but no product. In August Kevin Bachus became CEO and left in November of 2005. Greg Koler, previously the company's European director and consultant, was appointed interim CEO. [1] Later, on January 11, 2006, Greg Koler was elected as full time CEO.
The Phantom is at essence a personal computer, made of off-the-shelf components and hardware. Infinium claims that it will be able to play games streamed over the Internet through a broadband connection for a monthly fee.
Opinions amongst the Internet gaming and business community are mixed. The popular webcomic Penny Arcade has been vocally and ferociously critical of the company and its flagship product [2][3][4][5]. The Phantom is generally viewed, at best, as a well-intentioned product that has been outclassed by its competitors, similar to the Indrema game console, and at worst as a scam to cheat investors out of their money. Few believe it will ever be released as a retail product.
Infinium Labs trades on the OTCBB.
Legal Controversies
HardOCP Lawsuit
Steve Lynch wrote a less-than-positive report on the company and its founder that was posted in September 2003 at HardOCP, a computer hardware news website. Infinium Labs threatened to file a defamation suit in 2004 against HardOCP claiming that the article "painted a portrait of a company intent on swindling the public." On February 27, HardOCP struck first, filing a lawsuit that asked a judge to rule that it did not libel the company or its founder. Infinium dropped its opposition to HardOCP's lawsuit on January 5, 2005 when HardOCP promised that they will drop their lawsuit in exchange for $50,000. Infinium consented, and both parties dropped their lawsuits. Both parties were tarnished by the experience. HardOCP's owners, parent company KB Networks, had to pay over $250,000 in legal fees, while Infinium Labs had lost much of their credibility among the Internet gaming and business communities.
Growing Legal Problems
Because of the mystery surrounding Infinium Labs, the editor of the PC hardware website HardOCP published an article detailing the questionable history of Infinium Labs' CEO, Timothy Roberts, and the company's mysterious finances. The article was posted on September 17th, 2003.
On February 19th, 2004 (five months later) Infinium Labs' lawyers sent a cease and desist letter to the editor of HardOCP, demanding that the news site take down the derogatory article about Timothy Roberts. Rather than concede to the demands, Kyle Bennett filed a lawsuit.
In mid-September of 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 Labs did not produce the required documents, instead agreeing not to pursue its own lawsuit which prompted HardOCP to drop its suit. It was also reported that HardOCP also received $50,000 from Infinium Labs in the agreement.
On October 31, 2005 it came to light that the Securities and Exchange Commission have given notice to Tim Roberts, chairman of Infinium Labs' board of directors, that charges were being planned against him for violating unspecified federal securities laws. [6] In its statement on the notice, Infinium revealed that the company was not notified of the specific charges alleged against Roberts but that it suspected they were related to an SEC investigation that had revealed phony fax scams, where several penny stocks -- Infinium among them -- were unlawfully promoted to investors.
On October 31, it was also 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. From its inception Infinium has also consistently reported very small amounts of cash on hand and large (and growing) debt.
On November 17, 2005, Kevin Bachus, CEO of Infinium, handed in his resignation [7] as CEO of the company to take a position at another (undisclosed) company. (It was later revealed that Bachus was working at Nival Interactive's new studio in San Francisco.) Infinium's board of directors accepted it the next day and elected Greg Koler, a consultant for Infinium as interim CEO and President. Many interpreted this as a bad sign, as Kevin Bachus, who was in charge of 3rd party relations for Microsoft's Xbox, had brought much needed legitimacy to the company. Before Bachus took over, many had doubted the intentions of Infinium Labs.
On January 11, 2006, Greg Koler was confirmed as Infinium's CEO and President. [8]
On January 25, 2006, Infinium Labs reached an agreement to borrow up to $5,000,000 from the investment group Golden Gate Investors to finance the manufacturing process of the Phantom Lapboard, which is due for release later this year. If fully exercised this will be the largest amount of money borrowed at once to date by Infinium Labs. The loan would be paid over a period of 3 years, and can be converted into common stock and sold to pay it off that way. [9]
On February 21, 2006, it was revealed that the Phantom gaming console was put on hold indefinitely. It was also revealed in an SEC filing that Infinium had lost over $62.7 million in 3 years, over half of which was spent on marketing the company and its products which have not yet made it to market. Over $24 million was spent on salaries and consultants with only $2.5 million going towards development. Infinium still intends to release their "Lapboard" if their financial situation improves. [10] But, it has been announced recently that the "Lapboard" has been moved from its original release date in the second quarter of 2006 to October 2006. [11]
On May 24, 2006, Infinium Labs has filed a proxy statement [12] inviting their shareholders to come to Tampa Airport Marriott Hotel in Tampa, Florida on July 13, 2006 to vote on a proposal that would change the company's current name from "Infinium Labs" to "Phantom Entertainment", to authorize an issue of 600,000,000 more shares of common stock, valued at $0.001 apiece, and finally, to ratify an appointment of a new company, Webb & Company, P.A., as independent auditors for Infinium Labs for the rest of the fiscal year.
SEC Allegations
On May 16, 2006, the Securities and Exchange Commission (SEC) accused company founder and former CEO Timothy Roberts of running a pump and dump financial fraud scheme[1]. Among the major allegations was that, in late-2004, Roberts paid a promoter to send thousands of junk faxes falsely claiming plans to launch the system in January 2005. The resulting buzz drove Infinium Labs' stock up. For the work, Roberts paid the promoter $200,000 of company money and gave him 4 million shares of restricted stock without registering the transfer with the SEC. Meanwhile, Roberts 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. Roberts could face a fine and could be barred from serving as an officer in a public company ever again.
Notes
- ^ Chris Morris, 'Phantom' video game CEO charged with pump and dump scheme, CNN/Money, May 16, 2006, Accessed on May 17, 2006.