SeedInvest Campaign - Discussions with Richard Garriott / Lord British

I wouldn't make wrong statements, especially if the finance statements can be interpreted differently.

 

The financial statements can not be interpreted differently. They are what they are. It is an outside entity doing an assessment on Portalarium's financial situation. They have no reason to sway one way or the other. So when an unbiased accounting firm tells me Portalarium is almost bankrupt I will take them at their word. You are free to do what you want but you seriously need to read what SeedInvest has posted on their website about this company.

 

No outside company is telling that. The risks and CF projections are part of the disclosed information that everybody can read and interpret. Stating that a company is going to be bancrupt soon is not something I would easily do in public.

 

I don't need to announce it in public. It has already been announced by SeedInvest. Maybe you are reading some other financial statements I don't know. BUt the documents I read clearly state the Portalarium has about 9 weeks left before they close the doors.

 

Respectfully, we don't know they are two months away from bankruptcy. How can we when we don't know what licensing deals they may have in the pipeline or how much those licensing revenues will bring in? We don't know what bank loans Portalarium might have, how long they might last or what type of interest has to be paid back. We don't know what other revenue streams have been planned or when they might be revealed. For all we know, the game is right on track financially.

What we do know is that there had to be plans for other revenue streams to fund episodes 2-5. Selling bundles, CoTOS, having telethons, etc can only go so far to support development. I think this is an awesome opportunity for funding the future of Portalarium. Now whether backers have the money to do it (or even the desire to take the risk) is another story.

 

When you have spent 18 million dollars on a project that has brought in no returns it doesn't take a genius to figure out what is going on.

 

Thankfully the remaining funds have, and from the start always have had income (like the stock, add-ons, bundles, new players, telethons, etc.) which is why more sources of funds and revenue are always welcome.

My checking account is barren right now but I can count on revenue every two weeks as thus haven't ever gone bankrupt. If I had limited funds available and had no incoming funds then I'd be worried.

What I wouldn't need is someone saying I'm a Big Mac away from bankruptcy because my balance today is only $1.78... that can't even feed me for one day so I'll be dead tomorrow .

 

I am not going into accounting on projects in development, revenue recognition etc. The metric that counts currently (and the one that is most critical with regards to company failure) is cash flow. Your statements are simplistic at best. Read the CF, the P&L and the BS and if you still come to the conclusion that this is a bad investment then don't invest. If you come to the conclusion that the business will cease operations I still would be mindful making such a statement in public in a thread on securing equity. I am not a lawyer but that could be interpreted as slander.
Please keep the discussion on the professional level.

 

My observations:

• No surprise at all certainly after seeing Crowfall go down this route.
• Financials feel slightly weaker than I expected but nothing of real concern.
• Lots of very obvious statements on the page that seems to be stirring up unfounded and irrational thought on these forums and elsewhere over solvency.
• I would steer more to looking at cashflow rather than looking at "big" numbers and obvious statements then concluding the world is doomed............it simply isn't the case.

 

SeedInvest shows the cash flow of Poratlium. This is taken directly off the SeedInvest website.

• What is the current cash position?
  As of May 17th our current cash position is $528k, and we have one of our periodic telethons coming up which commonly net us in excess of $100k additional funds.

 

The expense figure quoted is the gross expenses, not the net profit/loss. If you read the Form C linked from the end of SeedInvest page it gives you the cash on hand at end of calendar 2016 and you can compare that to the cash on hand as of mid-May. Showing Port has had a net burn of $16.5k per month this year, taking into account income from add-ons, bundles, telethons, etc. That's not a bad burn rate for a development stage company, BUT it it also means they do not have enough cash to do a marketing launch of SotA without raising more $$.

Note I am NOT necessarily recommending this as an investment. I just don't like seeing bogus information when I know better. I am a retired venture capitalist and general management puke, I do know what I'm looking at when I read this stuff. Crowd-funded offerings are fairly new, but financials are still the same, and I've read thousands.

ETA: Like Envy said above, look at net cashflow. Cash is life.

 

Good for you. But how much money they have in hand at the end of 2016 is irrelevant. This is June of 2017. And from what I read their monthly expenditures are around 230K a month not 16.5k like you say. According to the documents they have Close to 600K dollars left. At 230K a month that gives them about 9 weeks.

 

I think you are missing something.

 

Maybe I am but i think the fact remains this game is in serious trouble.

 

You don't know what you are talking about. Their gross expense are $230K per month. That's a required disclosure. That has to be netted out against their gross income to see how much cash they are actually consuming, unless you think they are throwing away all the store and telethon cash on parties or something. By that measure, they have more than 30 months, BUT it's irrelevant because they need to transition from being a development phase company to marketing SotA, unless they want to go to a publisher/distributor. Given RG and Starr's prior experiences there, it's not surprising to see them try to do that on their own. I won't get into speculating on why doing it this way rather than going back to their A round funders.

 

LOL I guess you have never heard of a small startup called Amazon.com?
If my memory is correct, they were started in 1994 and did not turn a profit until 2003.

It does not take a 'genius' to understand how it works.
Being unprofitable is not unusual for anyone that understands operating a business.
I have started several businesses in my lifetime.
The most profitable one did not make ANY money and was broke for the first 4 years.
During that time if I had published my financial statements on the business you would think I would close the doors next week.

Today that business has been profitable for over 25 years.
Most of the hysterical comments I see about this on the forum are from the 'Chicken Little' types who are all doom and gloom.
They will not be investors and gloat with anyone's demise.

I had hoped to refrain from any further posting on this subject.

The members posting these comments are not posting to understand,
they only want to express their opinions and will never understand.

 

Would love to hear how you would come up with that.

I actually see a pretty strong position.

Just from what I see in add on store and telethon results alone, they keep even with their monthly debt and the $500K in cash is probably what they keep on hand period.

How would you say that is different from a typical AAA game where they go 100 million into the red before making a single dime?

SOTA is $500K in the black as release nears. 100 mil in the red vs $500K in the black seems pretty healthy to me.

 

And you make those views perfectly clear in your awful reddit comments don't you. It's a shame.

If you don't really understand the financials why even comment? instead of bashing the game and accusing developers of "leaching" money....why not give real constructive criticism in a polite why..........................you know what, if you don't want to do any of that and you still don't like the game just go play something else and try it again a few months down the line (in other words why are you wasting your own time.....).

 

I can appreciate your concern. My advice - don't invest.

For myself, I don't agree with anything you've said and once I have my genius investment analyst look this over, I will likely put in a small amount. Had I not already backed the game to the tune of XX thousands of dollars, I'd put in more

 

Lets do some maths.....

It means they lose approx. 16.5k per month after income of that month-expenses by those figure....Which is very good in fact at this stage of development.

We know they take about 100k+ on each telethon, 4 a year so that's approx. 40-50k a month they get from telethons.
I'm not sure what they bring in a month from the store but so long as it approx. 5-6k a day on average, 150-180k a month then with the additional telethon amounts that totals 17ok+45k = 215k approx...We know they say it takes i think 230k a month to run.....so they approx. 15k a month down....
AT this rate, then they have approx. 550/17 = 32 months till bankruptcy....

These are actually very strong figures as far as I'm concerned with all the bad press from people, and the tales of doom....Seems they are working well to budget and should be commended for it.