An industry punchline

At this point, Phantom Entertainment—formally known as Infinium Labs and more formerly known as Global Business Resources—has become a joke among gamers. You don't even need a punch line anymore; just set up a premise with Phantom in the title, and the jokes write themselves.

Phantom was going to remake the gaming world with a new console, the Phantom Game Receiver. An unknown startup that made such an announcement back in 2002 was going to be greeted with skepticism, and Phantom found plenty. It didn't help that the company failed to produce said console; five years later, that dream is dead, but the company still lives on, hawking a hinged "lapboard" complete with keyboard, mouse, and hard surface. Actually, the lapboard doesn't exist, either. Initially slated to be absolutely, for sure available by the end of 2006, the lapboard is still nowhere in sight.

In the meantime, Phantom chalked up huge losses, and new cash (for obvious reasons) is hard to come by. The company's recently-filed SEC report for 2006 shows us exactly how Phantom continues to cling to life.

Bills, bills, bills

Phantom Entertainment does not meet the standard definition of a "stable company." In only a few years, Phantom's corporate headquarters have bounced from Florida to Washington State to New York, and the company has now announced plans to relocate back to Florida. Their current digs are listed at an unprepossessing address in Port Chester, NY. Their current phone number leads to a voicemail system that doesn't even bother to identify the company. (Phantom did not return a call for comment on this article.)

While its executives have been circling the country in the quest for the perfect headquarters, they've left a trail of debt in their wake. Merrill Lynch, for instance, was the company that owned Phantom's Seattle headquarters, and they weren't pleased to find Phantom come up $127,312 short on the lease. So they took Phantom to court, hoping to recover the money. The lease, which was supposed to run until August 2006, was reworked and came to an abrupt end in February 2006. Merrill Lynch worked out a payment plan with Phantom that would see the company pay $5,000 a month and then cough up the remaining balance in a balloon payment due in July 2006.

But Phantom (still known as Infinium Labs back then) didn't make the July payment, apparently because they were out of cash. The company hoped to raise the money by selling another 50 million shares of stock, but decided to withdraw the SB-2 application in May. When July 31 rolled around, Infinium couldn't pay. Merrill Lynch then turned the collection rights for the account over to a third party, who signed another settlement agreement with Infinium on September 20. Under this deal, the debt was "settled for $100,000 pursuant to 3(a)(10) of the Securities Act of 1933," according to the most recent Phantom filing with the SEC. Infinium/Phantom apparently used its own stock to pay the debt.

It's a pattern that recurs in many of the company's dealings, especially in the legal cases—and there are plenty of legal cases. When we looked into SEC documents like the company's annual report, we found a company that changes names and locations with amazing frequency; a company whose chairman has been indicted by the SEC for participating in a pump-and-dump "fax blast" scheme; a company that routinely issues more stock when it runs into trouble.

Amazingly, Phantom lives on, a testament to just how long a company can survive without cash when it simply stops paying creditors. The company is down to three full-time employees but still hopes to launch its Phantom Wireless Lapboard in September—if it survives that long. When Phantom's outside auditors prepared its most recent financial statement for the year ended on December 31, 2006, they "expressed substantial doubt about our ability to continue as a going concern."

In Phantom's favor, though, is the fact that auditors expressed the same concern in the company's 2004 year-end report. Yet Phantom clings to life. Whether or not people like the company, surely this sort of achievement is worth some kind of endurance award.