Losses Pile Up For Infinium Labs, and So Do Debts
Infinium Labs revealed in a 10-QSB SEC filing this week that it lost $50.06 million from inception in late 2002 through March 31. Its loss for the quarter ended March 31 widened to $14.06 million (11 cents per share) from $6.24 million (7 cents) a year ago but its operating loss narrowed to $3.65 million from $6.15 million. It reported an operating loss to date of $33.95 million.
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The company also once again included a “going concern” warning, saying that it now had a working capital deficiency of $13.29 million, a stockholders deficiency of $12.61 million and a negative cash flow from operations of $14.30 million. It said that, combined with its net loss to date, “raises a substantial doubt about its ability to continue as a going concern.” Infinium said its ability to survive was “dependent on the company’s ability to raise additional capital and implement its business plan.”
Details about the recently reported, non-public SEC investigation “In re Certain Fax Blasts,” meanwhile, remained sketchy. The company said in the filing that the investigation was “ongoing,” and that it had “provided documents in response to SEC subpoenas, and 2 company employees, including the CEO [Timothy Roberts], have testified in the investigation concerning, among other things, events at the company.”
The company also said it now owed a total of $885,000 in advance payments to various game publishers as part of deals that were signed for the companies to provide content to Infinium’s long-delayed Phantom Game Service, now slated for launch in the 4th quarter of this year. Infinium said the advances were “recoupable by us against future royalties payable to these publishers under their respective agreements,” and that “if we fail to pay these advances, these agreements may be terminated.” It admitted that “this would add risk to the success of the Phantom Game Service and to viability of the company.”
Infinium said it already signed deals with publishers including Atari, Codemasters, Eidos, GarageGames, O-3 Entertainment, Riverdeep and Vivendi Universal Games.
Despite the planned launch of Phantom later this year, Infinium didn’t have a booth at last week’s E3 Expo
- likely because of the high expense involved but comment wasn’t available from Infinium by our deadline.
The company said it was still “seeking funding for the launch” of Phantom as well as “manufacture of the Phantom Game Receiver.” The company estimated that the service and receiver “will be available for launch 120-150 [days] after it has secured funding of the first $11.5 million.” By that estimate, the company could still conceivably launch the service and receiver in the 4th quarter. Infinium said the “initial subscriber sell thru milestone is 3,000 subscribers in the first month of launch.”
Infinium said the estimated price of the Phantom receiver will be $299.95 although it said a while ago that it planned to also offer the receiver for free to consumers who sign up in advance for 2 years of service. The company said it expects to have a “limited regional rollout of 10,000 units” of the Phantom console in Q4. It contracted with Pinnacle Marketing Group and Summit Sales to help it with “securing retail channel distribution” for Phantom. Infinium noted that Pinnacle was located in Minneapolis - near Best Buy and Target - while Summit was based in Richmond, Va., near Circuit City. Infinium said that “by working with these 2 firms we are able to provide local support to our potential retail partners.” But it had yet to announce which retailers will be carrying Phantom.
The company also revealed in the filing that PR firm The Bohle Co. sued it in Sarasota Circuit Court, Fla., last month for breach of contract. Infinium said Bohle accused it of failure to pay for PR services that were performed and asked for damages of about $262,151 plus interest and attorneys’ fees. Infinium said it filed an answer to Bohle’s suit early this month, denying the PR agency’s allegations and “asserting a number of affirmative defenses.” But Infinium said the companies “engaged in settlement negotiations and expect to file a joint stipulated motion for entry of final judgment.” Infinium said the settlement “will consist of shares of Infinium common stock sufficient to satisfy plaintiff’s alleged damages.” Bohle didn’t respond to a request for comment by our deadline. Infinium’s relationship with another PR firm ended a while ago under sketchy circumstances. The company has been involved in other lawsuits as well over the past couple of years. - Jeff Berman