Author Topic: Why do they not sell shares instead?  (Read 6347 times)

vintologi.com

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Why do they not sell shares instead?
« on: June 29, 2018, 08:13:12 AM »
It has 2 advantages
-not refundable.
-no p2w issue.

Of course selling worthless virtual items is better if you can get away with it but it's twrrible for the backers & the game as a whole. Virtuix raised 7.7 million via seedinvest (i didn't invest).

dsmart

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Re: Why do they not sell shares instead?
« Reply #1 on: June 29, 2018, 03:54:06 PM »
Because they would have to file paperwork with the SEC. And that paperwork - including financials - would be public. Unless they sell private shares.
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

Penny579

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Re: Why do they not sell shares instead?
« Reply #2 on: July 01, 2018, 07:02:32 PM »
there would be some legal protections and honesty requirements! it would also attract more critical thinkers

dsmart

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Re: Why do they not sell shares instead?
« Reply #3 on: July 02, 2018, 03:40:53 AM »
there would be some legal protections and honesty requirements! it would also attract more critical thinkers

Well when people buy shares in a company, it's because they expect to make money. At this point, with almost $200M in backer debt, not to mention the US and UK loans, how exactly does an investor expect to make money? If they could get investor money, they won't be taking out loans.
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

vintologi.com

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Re: Why do they not sell shares instead?
« Reply #4 on: July 02, 2018, 09:08:27 AM »
Well when people buy shares in a company, it's because they expect to make money. At this point, with almost $200M in backer debt, not to mention the US and UK loans, how exactly does an investor expect to make money? If they could get investor money, they won't be taking out loans.
I was thinking about selling shares to backers, a guy willing to spend 50000$ on ships might be willng to spend 500000$ buying shares.

If they sell a share at 25x the fair price they will only get 4% back if they try to get out (unless they find another fool). They could offer this to all backers.

Is there any regulating preventing them from selling overpriced shares?

dsmart

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Re: Why do they not sell shares instead?
« Reply #5 on: July 02, 2018, 10:38:00 AM »
It wouldn't make a difference who they sell shares to. The SEC rules and guidelines are the same.
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

Penny579

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Re: Why do they not sell shares instead?
« Reply #6 on: July 02, 2018, 05:36:04 PM »
The thing is wtih 200 million dollars of public money they should be listed on an exchange, the very reason exchanges have listing rules is to protect the public from people raising money and using it for shenanigans. 

sadly Even one of the more racy exchanges like London's AIM market which allows smaller, less-viable companies to float shares with a more "flexible" regulatory system  probably would not let this shit fly.

I think there was also a kick starter type page that let you get shares in projects but they got shut down for breaking investor protection rules.

remember a return on investment does not have to cash.

but why would you put your self up for scrutiny, give your self a set of rules which if when broken will land you in jail when you already have the money...


N0mad

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Re: Why do they not sell shares instead?
« Reply #7 on: July 03, 2018, 12:40:50 AM »
The simple answer here is that there is more perceived value in a JPEG than a company share.

krylite

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Re: Why do they not sell shares instead?
« Reply #8 on: July 11, 2018, 02:10:35 PM »
Well when people buy shares in a company, it's because they expect to make money. At this point, with almost $200M in backer debt, not to mention the US and UK loans, how exactly does an investor expect to make money? If they could get investor money, they won't be taking out loans.

Exactly. The real balance sheets year to year must look like a joke to any auditing. All the criminality and self-enrichment stuffing would be exposed. Supposed shares would be worthless just like those penny stock scams advertised in spam, junk mail flyers, and financial parrot news sites. Lots of backer bagholders when the stock implodes.
« Last Edit: July 11, 2018, 02:13:20 PM by krylite »

Penny579

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Re: Why do they not sell shares instead?
« Reply #9 on: July 12, 2018, 01:21:12 AM »
There has been plenty of publicly listed fruad, it's just harder to do....

dsmart

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Re: Why do they not sell shares instead?
« Reply #10 on: July 12, 2018, 06:42:18 AM »
There has been plenty of publicly listed fruad, it's just harder to do....

While there has been no actual public evidence of fraud, the issue is that making the company's financials available to private investors isn't the norm. Those disclosures are mandatory when dealing with financial institutions, and in most cases, accredited investors. So it's easy for them to issue shares without having to disclose any actual detailed financial statements to an investor. All they can do is present "top level" numbers which, if fraudulent, is what tends to land people in jail. e.g. all the people who invested with Madoff, didn't get to see the company financials, or they wouldn't have invested. It's also why Bootcha, one of the early stage investors in the project, got his money back when he asked for the financials.

It's also why the SEC came up with new guidelines and support for unaccredited investors via the JOBS Act; and under which companies like FIG, StartEngine etc operate in some cases. Those guidelines protect smaller investors and give them rights they otherwise wouldn't have if, like the Star Citizen backers, they were just throwing money into a fire pit.

In most cases, the paperwork explicitly prevents access to financials like that. Even a public company, which has to make its financials available, doesn't have to disclose every little detail. e.g. we won't know what the CIG-LA space door cost, because that item can be buried in other expenses. You can take a look at the public (it's the law in the UK) filing for Frontier (devs of Elite Dangerous) and have an idea.

However, when companies get sued, and it's related to financials, then all that paperwork gets compelled into discovery. It's why Crytek was able to make those demands for the financials because monetary gain is material to their claims. And it's why CIG freaked out and filed a protective order to delay it.

It's also why State and Fed govt agencies (IRS, FINCEN, FTC, State and Attorney Generals etc) who then dive into details can uncover fraud when they start following the money. They get to inspect every little detail, who got what, when, how etc. It's also why in ALL cases of financial fraud, there is ALWAYS a charge of "wire fraud" and "bank fraud" because as long as funds went through a bank, and was moved from A to B, it will fall under those guidelines.

In the case of CIG, unless they were stupid enough to actually flat-out engage in that, it's going to be very difficult to prove fraud - of any kind. Things like malfeasance, unjust enrichment etc, are easier to allege and prove - due to their nature. If they however presented bogus paperwork and numbers to either an investor (of any kind), a bank, a tax authority etc - and the intent was to commit fraud, that's when people go to jail.

If you go back and read the crowd-funding cases which have been brought by States or the FTC, you can see that there are no allegations of fraud because it's a very huge bar to cross and get to.
« Last Edit: July 12, 2018, 06:44:20 AM by dsmart »
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

Spunky Munkee

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Re: Why do they not sell shares instead?
« Reply #11 on: October 24, 2018, 12:10:40 AM »
Beyond all of these excellent points made the biggest reason to have backers not investors who buy shares is that backers dont own anything, at least as far a Robbers thinks. Shareholders technically own some small portion of the corporation and are in some respect allowed to collect should there be anything left at dissolution which is rare (why would they be folding up the circuis tent in the first place?). As it stands backers have literally handed Robbers this company outright. He started with essentially nothing but an idea. He didnt even make the first video that he used to promote the game yet people lined up with wheelbarrows of cash throwing it at him. So aside for all the paperwork, reporting, and other liabilities, as it stands this is a very one sided relationship where backers have exactly zero equity in this venture and Robbers believes he owes them nothing should he fail.

Why would he hand part of the equity for HIS corporation to these losers? They might actually demand progress, have him removed as Project Manager if they had enough preferred stock and sat on the board.

dsmart

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Re: Why do they not sell shares instead?
« Reply #12 on: October 24, 2018, 03:23:49 PM »
Also, investors will have financial accountability for the money.
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

Slapmeandcallmegurl

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Re: Why do they not sell shares instead?
« Reply #13 on: December 28, 2018, 06:23:04 AM »
Maybe they will sell shares after all...just not to backers.

dsmart

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Re: Why do they not sell shares instead?
« Reply #14 on: December 28, 2018, 08:10:11 AM »
Selling private shares was never an issue; as they have been doing it for several years now. The reason that this $46M was made public is because it had to be filed publicly in the UK, and also because it came with strings in the form of a director babysitter. We would never have known about it otherwise. And since (as I mentioned in a previous post above) they had to disclose the financial statements, it also forced them to make it public in some fashion (they went the brochure route because they mostly have fools for backers).

They cannot sell shares to backers without doing so as part of either a private placement (as they are currently doing) or publicly via the JOBS Act (which is how Fig does it).

Nothing is stopping them from selling shares to backers, or doing profit share type investment deals. e.g. Bootcha who pulled out back in 2016, was one such investor on the US side. He didn't have shares; only a profit sharing investment.
Star Citizen isn't a game. It's a TV show about a bunch of characters making a game. It's basically "This is Spinal Tap" - except people think the band is real.

 

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