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Infinium chases further funding for Phantom

Needs $11.5m just to sell first 10,000 consoles

Infinium Labs, the company behind the highly hyped Phantom games console and similarly named online service, needs to find $11.5m if it's to go ahead with the launch.

The confession is made in its latest filing with the US Securities and Exchange Commission. In the document, Infinium reveals it will have to spend $22.2m in the next 12 month in order to execute its "current business strategy".

"We estimate we will need approximately $11.5m to launch the Phantom Game Service and sell the first 10,000 units of the Phantom Game Receiver", the company says. "After launch, we estimate that we will need approximately $10.7m to achieve cash flow break-even."

In addition, the company said it anticipates having to spend a further $20.2m over the next 16 months promoting the console and the service it connects to.

The problem Infinium faces is that, as of 30 September, it had just $20,991 in the bank, leaving it with a very considerable cash shortfall to make up if the launch is to proceed as planned.

The company said it has hired SG Capital to help it raise the funding it requires, and indicated that it was already talking to a number of potential backers. It also plans to discuss a debt-for-equity scheme with its current creditors.

But it warned: "If we are unsuccessful in raising capital or we do not launch the Phantom Game Service when currently planned, we will need to curtail our proposed spending."

The Phantom console and service were due to launch this month, but in September this year it put the release back to Q2 2005 at the request of "marketing and retail partners" unhappy with that timeframe - no great surprise, given the strength of both the Xbox and PlayStation 2 holiday offerings, not to mention the debut of the Nintendo DS in the same period.

To be fair, SEC filings tend to paint an overly negative picture, the better to avoid the risk of annoying shareholders. Infinium's business plan is unlikely to be predicated on such an early break-even date, given the sheer cost of developing, manufacturing, distributing and promoting a new hardware platform. Even this likes of Sony, Nintendo and Microsoft don't expect hardware sales to pay for themselves for a very long time, if at all.

However, those companies have significant internal financial resources to call upon, and that's what Infinium lacks. It really is dependent on winning funding for a significant chunk of the $40m-odd it expects to spend over the next year if it's to stand a chance of launching Phantom and building a sustainable business on the back of it. ®

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