Stargate Developer Cheyenne Declares Bankruptcy Amidst Internal Strife

Long-troubled independent developer Cheyenne Mountain has filed for Chapter 11 bankruptcy protection--a move meant to enable continued operations while it restructures with an eye towards financial stability--alongside word that the company has joined proceedings alleging former chairman and CEO Gary Whiting of wrong doing. nope

In a statement, Stargate Resistance developer and Cheyenne subsidiary FireSky noted that the Chapter 11 filing "is still being evaluated and may be rescinded" while vowing continued "upgrades and expansions" for the recently released sci-fi shooter.

As for the case against its former chairman, Cheyenne claims that Whiting has "failed to honor" several purchases and "failed to pay the payments when due," resulting in both financial problems and opening the company to litigation from other parties.

Cheyenne had hoped that the February 2010 release of Stargate Resistance (PC) would provide it with the funds to continue developing its Stargate Worlds MMO.

The company's official statement and accompanying announcement follow:

Official FireSky Statement

Hi guys, in light of recent events this is the official statement from FireSky:

Cheyenne Mountain's corporate structure has undergone some dramatic changes in the last few weeks, and that has resulted in various actions such as the filing for Chapter 11. Certain parties believed that was the right thing to do, other parties do not and this is still being evaluated and may be rescinded. Even if the bankruptcy should go through, however, Chapter 11 simply allows a company to restructure its debt to a manageable plan approved by the courts. It does not absolve a company of debt, and it does not shut it down or otherwise affect its daily operations.

This will all be sorted out in the legal and proper manner, and all of us on the development side of things hope it's done as quickly as possible.

That said, our entire staff is in-house working on upgrades and expansions for Stargate Resistance, and we continue to be motivated and excited by the response we've received from our customers.

See you on the battlefield!

FireSky

CHEYENNE MOUNTAIN ENTERTAINMENT JOINS LITIGATION

MESA, Ariz. - February 16, 2010 - Gary Whiting, the Company's former, Chairman and former CEO of its subsidiary Cheyenne Mountain Games, Inc. has been named in a complaint filed in Maricopa County, Arizona Superior Court by shareholders, derivatively on behalf of Cheyenne Mountain Games, Inc. and Cheyenne Mountain Entertainment, Inc., alleging various wrong doing against the Company.

The Company also became aware a few months ago that Mr. Whiting, was named in a complaint filed in Utah County, Utah, (Case No. Civil 0904022438), and that he has caused the Company to be named in that same lawsuit, and he has allegedly obligated the Company for monies paid to Garvick Properties, LLC, a limited liability company controlled by Mr. Whiting ("Garvick").

Mr. Whiting and Garvick purchased various securities from the Company and its subsidiaries and has failed to honor the terms of these purchases and has failed to pay the payments when due; therefore, the Company and its subsidiaries have foreclosed on the collateral securing Mr. Whiting's and Garvick's obligations including all shares and units owned by Garvick and Garrick Enterprises, LLC. The shareholders and board of the Company have removed Mr. Whiting as a board member and as an officer and terminated his employment with the Company and any of its subsidiaries. The Company has joined the litigation against Mr. Whiting for alleged wrongdoing. More information about the litigation can be found at www.superiorcourt.maricopa.gov/docket/CivilCourtCases/caseInfo.asp?caseNumber=CV2010-003106.

It is uncertain at this time what the affect of Mr. Whiting's actions and the pending litigation will have on the Company's operations and financial condition.