Laying out all the Cards…


As you likely already know, the U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of Phantom Entertainment, Inc. (PHEI), commencing at 9:30 a.m. EDT on June 24, 2009 and terminating at 11:59 p.m. EDT on July 8, 2009: the

According to the U.S. Securities and Exchange Commission:

“The Commission temporarily suspended trading in the securities of the foregoing companies due to a lack of current and accurate information about the companies because they have not filed certain periodic reports with the Commission. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).”

The Company is delinquent with the following SEC filings:

10-QSB Q2 2007
10-QSB Q3 2007
10-KSB Y/E 2007
10-QSB Q1 2008
10-QSB Q2 2008
10-QSB Q3 2008
10-KSB Y/E 2008
10-QSB Q1 2009

In order for the Company to submit these filings to the SEC’s EDGAR system, financial audits must be conducted by a PCAOB certified for both delinquent 10-KSB filings (Y/E 2007 and Y/E 2008).

The PCAOB (Public Company Accounting Oversight Board) is a private-sector, nonprofit corporation, created by the Sarbanes-Oxley Act of 2002, to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

Unfortunately, these audits are not cheap.

In addition, the Company would need to obtain the consent from the auditor to file each 10-QSB which is not cheap.

Also, all of these delinquent filings would need to be reviewed and given the OK to file by an Securities attorney.

It is our estimate that it would cost approximately $200,000 in auditor and attorney fees for the Company to become current in our SEC filings and that does not include each Q going forward.

The reason why the Company became delinquent in our filings in the first place was strictly due to lack of money. Understandably, the auditor will not provide their consent for the Company to file the required reports when the Company has an outstanding bill with the auditor as it would jeopardize the auditor’s independence.

Upon further discussions with the U.S. Securities and Exchange Commission, as well as with a well respected Securities attorney, the ball is in the U.S. Securities and Exchange Commission’s court. The Company has been informed that it could voluntarily consent to being removed from pinksheet status but that is not our intention. It is the Company’s desire to retain pinksheet status and will not voluntarily consent to being stripped from pinksheet status as we do not believe that is in the shareholders’s best interest.

With that being said, the U.S. Securities and Exchange Commission has the authority to force the Company to be involuntarily removed from the pinksheets. The Company hopes the U.S. Securities and Exchange Commission does not take this action as the Company does not believe that is in the shareholders’s best interest

Hopefully it does not come to this but it is a real possibility as due to prior fund raising was not done the interest of PHEI which has made it impossible for us to raise more money. Since we believe this is a very real possibility, if the U.S. Securities and Exchange Commission does take this unfortunate action of forcibly removing the Company from the pinksheets we do have a preliminary plan in place to eventually regain our pinksheet status which would be to work with a Securities attorney to file a Registration Statement if and when the Company has the cash to do so. It is our belief that it will cost approximately $150,000 in auditor and attorney fees to file this Registration Statement. The Company will not be able to file this Registration Statement until the Company has the funds available to do so and we can not predict when, if ever, that may be.

With that being said and as you may or may not know, there are currently 500 Lapboards on ship making their way from China to the USA. No matter what action, if any, the U.S. Securities and Exchange Commission takes, it will not derail us from our mission to bring the Lapboard to market, begin generating sales and conduct business in a manner that keeps the shareholders’ best interest priority number 1.

We have no intentions of changing the share structure or shareholder base. The current share structure is as follows:

Outstanding Shares
2,044,830,571 as of June 26, 2009

Authorized Shares
2,400,000,000 as of June 26, 2009

Even if the U.S. Securities and Exchange Commission does take this unfortunate action of forcibly removing the Company from the pinksheets, the Company’s plan is to keep the current share structure intact and regain pinksheet status by generating enough sales to eventually provide the $150,000 to pay the estimated auditor and attorney fees we estimate will be incurred to file the Registration Statement to regain the Company’s pinksheet status.

There it is, the horrid truth – so even with the above I’d like to say this:

I jumped on board this sinking ship with high hopes of plugging it’s holes as quickly as possible and getting back on course. Over the last 8 months the holes were few and far between, and we were starting to sail straight again. As the new Captain I’ve always had my crew’s well being in the forefront of my mind, while trying to make my way to solid land. There is still a lot of crap in the Haul of this ship slowing us down and while I’ve tried to dodge as many obstacles along the journey, we’ve hit a reef just short of shore and it has crippled us pretty bad. I’m asking you not to abandon ship, though it’s probably your first instinct. We are still selling our bounty to the world, and since our exposure many have been asking to purchase our treasure. We are also actively now welcoming daring Angel investors to help repair the damage of the last 7 years. We are sooo close to solid land, yet sooo far with the financial anchor we are now faced with.

If anyone sees that we have been straightforward, and wishes to come aboard – with the knowledge that the ship could sink at any moment, please give me a ring or email me at jlandino@phantom.net

Once again – when our other ship comes in in July we will be selling boards on phantom.net. Thank you.

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28 Responses to “Laying out all the Cards…”

  1. As always, thanks for the honesty. You guys have done a great job. Hope we can get all this worked out.

  2. Unless there’s a miracle, it sounds like few more years down the road to see the face of PT on pinksheet again if the operation and sales of LB are succesful.

  3. jan lechner Says:

    UNBELIEVABLE !!! ( or not )

  4. cozmo aka java Says:

    If it really is the “best interest of the investors” that matters, focus on raising the 150k to file the paperwork, and make it right. I believe in the Lapboard product and I put my hard earned cash into the company for years now to support it coming to market. I’m just a drop in the bucket but if investors are wiped out now it is just wrong. Want to help us? tell us what will happen to the stok on the Gray Market, if that is where it will end up. What will the new ticker be? etc… I’ll repeat a comment made on the last post, “thanks for letting us discuss stock” for a while. We are very concerned and need as much info as possible, even if it is”game over” for us, lets hear it. Thanks.

  5. Been in it for a long time so not going anywhere – keep the faith and keep doing what you do. This will right itself.

    Obviously there is going to be the negative band wagon coming down line but focus on the busines – market and sell the lapboard – these activities will generate the cure (income) to all the woes.

    Just wish I had a spare $200k laying around….. 🙂

  6. this is unreal to take, all the positive news and now this, i honestly am not jumping ship at all as its not worth it now, but i dont see this stock ever existing , as we will be wiped out and again screwed by govt

  7. At least there actually IS a lapboard at this point, with a manufacturing process in place. There’s still hope that the market for the lapboard could get sales up enough to get all this straightened out.

  8. How can you be blind sided by something so obvious? You had to know you were late with these filings. Care to explain your oversight?

  9. phantomadmin Says:

    WE DIDNT HAVE THE MONEY …. if you need it spelled out. Kinda hard to keep current when the past has sucked us dry…. the SEC changed the rules for Pink Sheets – read up on it…. -Sigh

  10. Let’s not develop a lay down and die attitude. How many shareholders are there who would like to see this thing continue? If:
    1000 shareholders contribute $100 each = $100,000
    1000 shareholders contribute $200 each = $200,000

    what say you everyone, we have the chance to make this thing happen. The current PHEI crew has been working for free for a long time. Its time to man up or whimper quietly into the night. The above cost per person is nothing compared to what most of us would lose.

    Let’s get creative with financing, any all options. There are a lot of smart people that read and contribute to this blog. I don’t want filings to undermine the momentum.

  11. btw, i’m just a long term investor – about 3 years now. I have no other stake in the company but that.

  12. See the “***Wanna help?*** link on the right side of the page. Some of us have already taken this route and I for one am willing to donate again, but without everyone on board, this approach is akin to cutting down an oak with a pocket knife. Right now, this looks like the best, or at least the most obvious thing we can do.

  13. Not my field of expertise here, but what about a share offering from the treasury of say 300 million shares @.0007 ($210,000)to stockholders of record for the express purpose of bringing SEC filings up to date. I’ll take 3 mill to add to the 15+ mil that I already have. Don’t worry about stockholders abandoning ship cause we are currently locked in the galley with no way out!!

    Who else??

  14. Darn good idea there jp!

  15. Krays, good thinking, but the downside there is dillution and a lowering of the stock price. However there may be an opportunity for Pahntom to buy it back in the open market, but there are severe limitations on how many shares you can buy back in a year.

    Perhaps it could be a mixture of both @Krays suggestion on some stockholder VC.

  16. HAPPY not Says:

    I been in for a very long time, even bought at .22 OOPS. then few million shares after that, then finaly some good news. 5 mil more on wed. now someone wishes to throw away more, sorry but this is insane,,,,,,,,,, and for a true investor, I keep seeing the truth’s “blind sided”

  17. I’m down with jpkin’s idea. I’m not ready to quit, and I don’t want to be wiped out by the government either. Seems like a small price to pay to keep the ship afloat. Anybody else game???

  18. jpkin’s idea is what it is going to take – either that or some other private funding.

    I also agree that if we only have a handful of people do this – no point. The numbers have got to be there. Is there a way to get info out to more people to poll and collect?

  19. Well, there are some very creative ideas being put forth. I’ve been in new product development etc for many years, as you can probably tell from past posts, and I have been thru similar pain with some of my clients before, and have put in lots of “sweat equity” trying to revive floundering programs.
    However, I also think the LB and future enhancements have a great future – but it’s gotta be handled prooerly.
    I also like John’s timely and straight responses. I’m still somewhat skeptical, but I’m beginning to believe he really does care and is trying to do the right thing.
    I’ve been in since IFLB, and have nothing to lose by staying (turned a few shares a while back so now basically have a bunch of free shares). Keep the options flowing, but we need to do something, if only a plan, in next couple of weeks.

  20. I’ll give…

  21. ‘heard it through the grapevine. “They have a solution if an angel investor does not step forward but that involves reapplying and will be half the price but again they will need to raise the money thru sales or an angel. The SEC is doing a wholesale clearing of the sheets.”

    Half the price? See? things are looking up a bit.

    Now at half the price, say $100k, that could be 500 investors at $200.00 …

  22. We need to rally the troops and get the donations flowing. Anyway we can get a goal/donation tracker for the money on the website?

    Also need the chip in site to work/get updated….

  23. phantomadmin Says:

    dude_rama@hotmail.com – Your misinformed information is not appreciated.

  24. thomas thompson Says:

    you all cant get a loan for 200k? there are sba loans avail. you all need to find a private investor or something but im game with the donations

  25. JOHN C.BEST Says:

    Even though I am a Charter Member of the $200 Club, I don’t think the pink sheet problem is the most important issue facing Phantom now. Those who disagree should join the club. No operating profits for at least the year 2009 should be diverted to the pink sheets issue. Cash is King for a company in Phantom’s position at this time. One of the biggest problems facing Phantom in the coming months is going to be the conservation of cash and the strategic doling out of scarce funds to develop a viable company. The company is not bankable, venture capital money would be too expensive so our options are few. Forget the pink sheets, forget the sale of the company in the immediate future and concentrate on turning Phantom into a profitable venture. Get the financials in order including the 2009 Q2 SEC, if possible, using operating profits, get organized as a legitimate company, make some money and all the other problems become moot. As someone has already said, this summer is going to be interesting. The ultimate test is going to be how the Lapboard is received. Every purchase is a customer vote of confidence. All is chatter so far. This summer the results of the vote will be in. Then we can worry about all the other problems. If we lose the vote, all will have been in vain. John B.

  26. cozmo aka java Says:

    Admin, Thanks for the last post about Dud-O-Rama who has been badmouthing the company since the beginning. He has now taken over at least 2 message boards, first Raging Bull, Now Yahoo, with the help of his buddy Mind31 aka ArthurSki, and now they have found the last board left for investors that had no bashers on Ihub. If nothing else I appreciate the fact that you recongnize his efforts to hurt the company. I still don’t know why anyone wastes time bashing unless they can make money from it, there is a small chance the investors here will stay alive but guys like him don’t help. I’ll try to stay positive and wish you luck on the lapboard launch. Great product that deserves a shot in the marketplace. Good Luck.

  27. Reading thru the SEC file no. 3-13527 it has us late with only 5 quarters. Last three of 2008 and first and second of 2009. Did I read that right? That doesn’t seem that bad to me. Some on the list we several years late. Also it says we are eligible for the piggyback exception. Is that worth anything to us? I understand if you cannot answer any of this on the blog. Thanks for all the hard work and great news on the Lapboard.

  28. John:
    If you are correct (re transfer of wealth to banks from all the stocks involved), then we need to blow the lid off this Obamanomics-theft – file a lawsuit or restraining order against SEC amd/or banks, notify media (especialy Fox and all financial media), … .

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