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[Cabbagehead]

Close; SC had been backed by over 68 million by the time 2014 rolled over to 2015.

Yep a accumulations of funds, spent throughout those years. For the most part, spread out over months and in-between dry spells.

snip

Why the hell do folks keep saying this nonsense? There is FACT and then there is FICTION. This is not skepticism at its core, this is a an agenda. Especially when they want to circumvent evidence to the contrary with baseless opinion.


Just say that you have nothing to add. None of this "Both sides are the same" cope out.

Since that's inherently false. I'm trying to debunk bullshit and obvious double standards. Not encourage balatant ignorance and unreasonable bias's. Beacuse it seems to rear it's ugly head everytime something "bad" happens in relation to SC or a delay happens. The hyperbole gets taken up another notch.

One side cites researched counter-agruments. While the other side cities circumstantially linked events, alongside conspiracy theories. Mixed with some vaild criticisms here and there. Right up still the point that it gets over-shadowed by the latter.

 

[Outrun]

Assuming that picture is from 2012/13? Because a lot of changes for the better IMO were made since then. I'd rather have them try for greatness and fail as a backer, than to have given us another Elite Dangerous. I say this as someone who backed and has played both.

CR and CIG cannot make the dates that they themselves set. This is an undisputed fact.

My opinion is that blind defenders of SC should not need to explain away the comments that CR himself makes.

This Kotaku article is not the panacea to explain all of the criticism for delays away.

 

[joecanada]

Yep a accumulations of funds, spent throughout those years. For the most part, spread out over months and in-between dry spells.



Why the hell do folks keep saying this nonsense? There is FACT and then there is FICTION. This is not skepticism at its core, this is a an agenda. Especially when they want to circumvent evidence to the contrary with baseless opinion.


Just say that you have nothing to add. None of this "Both sides are the same" cope out.

Since that's inherently false. I'm trying to debunk bullshit and obvious double standards. Not encourage balatant ignorance and unreasonable bias's. Beacuse it seems to rear it's ugly head everything something "bad" happens in relation to SC or a delay happens. The hyperbole gets taken up another notch.

One side cites researches counter agrument, the other side cities circumstantially linked conspiracy theories. Mixed with maybe some vaild criticisms but it always gets over-shadowed by the rest.

did you respond to the wrong guy? Dreams is a BACKER. and he is saying both sides can display very skewed views. and no one side doesn't "cite researches counter argument" whatever that means.... there are no facts here just what the company chooses to release to its fans and then yes some conspiracy theories on the other side as well. RSI has never released a detailed breakdown of budget, expenses, or anything remotely related to that .... and they don't have to being a private company. But as a result SC fans aren't citing research, they are citing what is released to them, which is never going to be negative facts.

the only facts that are likely to be known is when we are looking at this thing in hindsight 20/20.

 

[Cabbagehead]

did you respond to the wrong guy? Dreams is a BACKER. and he is saying both sides can display very skewed views. and no one side doesn't "cite researches counter argument" whatever that means.... there are no facts here just what the company chooses to release to its fans and then yes some conspiracy theories on the other side as well. RSI has never released a detailed breakdown of budget, expenses, or anything remotely related to that .... and they don't have to being a private company. But as a result SC fans aren't citing research, they are citing what is released to them, which is never going to be negative facts.

the only facts that are likely to be known is when we are looking at this thing in hindsight 20/20.

I know that he was a backer. I stand by my point.

 

[joecanada]

I know that he was a backer. I stand by my point.

so your mission is to debunk hyperbole and conspiracy theories by attacking anyone who isn't a "ra ra" cheerleader of everything the developer does. great plan. starting the fanbase of another game off to a great start even before the game is even released.

I never advocated for conspiracy theories there is such a thing as discussion, you just put words in others mouths, then argue with yourself.

 

[Cabbagehead]

so your mission is to debunk hyperbole and conspiracy theories by attacking anyone who isn't a "ra ra" cheerleader of everything the developer does. great plan. starting the fanbase of another game off to a great start even before the game is even released.

That's not what I said at all.

My underling point is, unless that person cite's sources to someway back up their conspiracy theories and opinion. Then that thoery or opinion has no grounds to stand on. So that person is the creator of his or hers own onus and so that person has to prove that their thoery has any bases or merit to even established such a opinion, with such conviction. Otherwise they just have a agenda.
...............

Also

What company or studio or business or independent party. Releases their budget? or expenses or anything related to do that in full? although per UK law. CIG/Foundry 42 UK has to release their bank records and have done so over the last two years. So there that. But even then people tired to find anything negative with that information and spread it , regardless of facts. In eithercase its bad business sense to show that to the public and they are under no obligation to do so as you corrected stated. With them being a private company. To avoid stuff like what happened around this topic, this out of context "OMG CIG is running out of money" bs.


Damned if you do Damned if you dont.


Also NO not everything that CIG gives a response to is postive or releases, it's the reason that Kotaku interviewed them about the troubled nature of the project in 2014 and 2015. So your point about putting it on CIG or that it's just me wanting people to only be ra'ra", thats just a preconditioned perspective.


Futhurmore that was spelling error. In relation to my "cited and researched counter agruments" aganist baseless opinions. You are advocating for conspiracy theories, which are usually very negative in nature. With again no bases in fact or evidence to state such a thing. They hold no merit and should not be encouraged.

 

[TheVoidDragon]

did you respond to the wrong guy? Dreams is a BACKER. and he is saying both sides can display very skewed views. and no one side doesn't "cite researches counter argument" whatever that means.... there are no facts here just what the company chooses to release to its fans and then yes some conspiracy theories on the other side as well. RSI has never released a detailed breakdown of budget, expenses, or anything remotely related to that .... and they don't have to being a private company. But as a result SC fans aren't citing research, they are citing what is released to them, which is never going to be negative facts.

the only facts that are likely to be known is when we are looking at this thing in hindsight 20/20.

They have told us negative things though - their explanations for delays and why things haven't always been going too well are some of them.

As for "it's not facts because they told us it!", how does that apply to what a few of the people determined to see the game fail have been saying - things like the lines of "The game is a scam!","it's doesn't exist!" ,"they aren't even trying!", "They're misusing the money, i can't prove it but you can't prove they aren't!" or "They spent money on perfectly normal expenses for businesses (Coffee Machines and the Door), how dare they!". Those are things that can be countered with what CiG and other sources have told us, that is what people mean by researched arguments rather than spouting whatever nonsense they can come up with.

 

[Vegetable Lasagna]

I wouldn't spend a time on this thing until it is finished. That's probably never going to happen regardless of this news or not. You can't have a project with this many people working on it with a continuously changing scope. It's going to fail the second people start getting sick of dumping cash into it and not getting the returns they are expecting.

Maybe one day a project with this kind of ambition will succeed, but it won't be Star Citizen. If it is I'll eat a used shoe from Goodwill. I think If we see anything released commercially it's probably going to be different chunks of the game broken off and released as a standalone product (e.g. H1Z1).

 

[Cabbagehead]

I wouldn't spend a time on this thing until it is finished. That's probably never going to happen regardless of this news or not. You can't have a project with this many people working on it with a continuously changing scope. It's going to fail the second people start getting sick of dumping cash into it and not getting the returns they are expecting.

Maybe one day a project with this kind of ambition will succeed, but it won't be Star Citizen. If it is I'll eat a used shoe from Goodwill.

You might aswell eat that shoe now. Because the scope stopped changing two years ago. Plus they have a release schedule for the community to follow and that will continue until beta. To keep them/us informed along with weekly reports and updates. So yeah...

Edit: Two games are being made by CIG.

Star Citizen and SQ42; one is a MMO and the other is a Single player game. Both share a lot of the same developer branch and tools an general development updates. They're already broke SQ42 into chapters. So there's that I guess.

 

[joecanada]

They have told us negative things though - their explanations for delays and why things haven't always been going too well are some of them.

As for "it's not facts because they told us it!", how does that apply to what a few of the people determined to see the game fail have been saying - things like the lines of "The game is a scam!","it's doesn't exist!" ,"they aren't even trying!", "They're misusing the money, i can't prove it but you can't prove they aren't!" or "They spent money on perfectly normal expenses for businesses (Coffee Machines and the Door), how dare they!". Those are things that can be countered with what CiG and other sources have told us, that is what people mean by researched arguments rather than spouting whatever nonsense they can come up with.

well of course saying "you can't disprove my made up assertion" isn't part of what I call discussion.... however without knowing a breakdown of what the budget is expenses, salaries, etc, we won't ever know how successful the game is/will be in relation to what is released, profits etc.... of course they never have to release this but I'm just saying everyone is operating off of what is given them.

For example say after everything, all the money, milestones, progress, the game does release and its done, tada! .......... but it turns out it's a 7/10 game on average. How then does that change the conversation? would all the backers be happy if say they backed for 40 bucks and got a decent game? how about the 1000 dollar backers, would they then be happy? both sides can get caught up in the extreme arguments of "this game is never releasing" and "wait till this game comes out everyone will shut up" ........ but have we considered how everyone will react if the game comes out and it's merely average, above average, etc?

 

[Dreams-Visions]

Y
Why the hell do folks keep saying this nonsense? There is FACT and then there is FICTION. This is not skepticism at its core, this is a an agenda. Especially when they want to circumvent evidence to the contrary with baseless opinion.


Just say that you have nothing to add. None of this "Both sides are the same" cope out.

Since that's inherently false. I'm trying to debunk bullshit and obvious double standards. Not encourage balatant ignorance and unreasonable bias's. Beacuse it seems to rear it's ugly head everytime something "bad" happens in relation to SC or a delay happens. The hyperbole gets taken up another notch.

One side cites researched counter-agruments. While the other side cities circumstantially linked events, alongside conspiracy theories. Mixed with some vaild criticisms here and there. Right up still the point that it gets over-shadowed by the latter.

You've lost touch or lost you fucking senses. Both you apologists and the haters are full of a lot of shit and I'm neither interested in entertaining it or getting involved in your exercises of immaturity and projection. Attacking other backers because they agree that there is room for criticism is shocking at BEST.

Step back, look in the mirror and reflect on your reaction. It's embarrassing and a poor representation of our community.

I know that he was a backer. I stand by my point.

and I for damn sure stand by all mine. Get your life together.

 

[Cabbagehead]

well of course saying "you can't disprove my made up assertion" isn't part of what I call discussion.... however without knowing a breakdown of what the budget is expenses, salaries, etc, we won't ever know how successful the game is/will be in relation to what is released, profits etc.... of course they never have to release this but I'm just saying everyone is operating off of what is given them.

For example say after everything, all the money, milestones, progress, the game does release and its done, tada! .......... but it turns out it's a 7/10 game on average. How then does that change the conversation? would all the backers be happy if say they backed for 40 bucks and got a decent game? how about the 1000 dollar backers, would they then be happy? both sides can get caught up in the extreme arguments of "this game is never releasing" and "wait till this game comes out everyone will shut up" ........ but have we considered how everyone will react if the game comes out and it's merely average, above average, etc?

That's the risk with game development and crowed funded games in general so....

I mean CIG is very, very upfront about the pitfalls of this and they were caught by said pitfalls in 2014 and 2015. Factors that may have halted or put a game in development hell for years behind closed doors or under a publisher.

snip

Some the stuff in this thread and the thread that started this is not cricitsm. If you believe that then you don't undestand what criticism is. I mean the community itself knows what to criticize and do it on a regular bases. I'm calling out bullshit like the false reporting that loan got and the other bullshit.

(baseless board statements don't do anything of merit)


What is this apologist bullshit tag? what the hell i'm i or others apologizing for? i thought that was called researched counter-agruments. I have no idea why you are trying give it a double negative type label. You want to excuse ignorance by allowing the ignorant few to side-step, anything that looks like a reasonable explanation. More so if they just think it's a scam or will never come out.

Like what discussion can you have with that? none. Other then citing sources rebuking it.


So don't you dare. Try to guilt trip me on anything.

 

[Vegetable Lasagna]

You might aswell eat that shoe now. Because the scope stopped changing two years ago. Plus they have a release schedule for the community to follow and that will continue until beta. To keep them/us informed along with weekly reports and updates. So yeah...

Edit: Two games are being made by CIG.

Star Citizen and SQ42; one is a MMO and the other is a Single player game. Both share a lot of the same developer branch and tools an general development updates. They're already broke SQ42 into chapters. So there's that I guess.

I'm aware of all of this though. Just remember money is finite and anything can change on a dime. Consumers are fickle, the videogame industry is volatile and the risk of these projects are huge if you want to realize it or not. Hey, and if I'm wrong I get the same product without spending any of my money on a bunch of promises until then.

 

[Cabbagehead]

I'm aware of all of this though. Just remember money is finite and anything can change on a dime. Consumers are fickle, the videogame industry is volatile and the risk of these projects are huge if you want to realize it or not. Hey, and if I'm wrong I get the same product without spending any of my money on a bunch of promises until then.

Oh of course.

See this is real skepticism, a true statement wrapped in a reasonable opinion.

I concede.

 

[TheVoidDragon]

I wouldn't spend a time on this thing until it is finished. That's probably never going to happen regardless of this news or not. You can't have a project with this many people working on it with a continuously changing scope. It's going to fail the second people start getting sick of dumping cash into it and not getting the returns they are expecting.

Maybe one day a project with this kind of ambition will succeed, but it won't be Star Citizen. If it is I'll eat a used shoe from Goodwill. I think If we see anything released commercially it's probably going to be different chunks of the game broken off and released as a standalone product (e.g. H1Z1).

You're basing Star Citizen not succeeding on what, exactly? The project stopped increasing in scope 2 years ago, and quite a significant amount of those additions were relatively simple things like new ships, anyway. They have the drive and the talent to back up their ambition. They aren't settling for something sub-standard, the quality of thework they've shown so far (e.g. ship damage models, planetary tech) has been extremely impressive even in the current unfinished state.

 

[Starbuck2907]

I've backed the game, and I'm quite happy with the progress. I hope they continue to take their time and do it right.

No one else's opinion matters, really, especially those with zero financial investment in the game.

Can't wait for 3.0.

 

[Outrun]

I've backed the game, and I'm quite happy with the progress. I hope they continue to take their time and do it right.

No one else's opinion matters, really, especially those with zero financial investment in the game.

Can't wait for 3.0.

Enjoy brother

 

[afroguy10]

Cool, didn't know they banked with Coutts. Their bank cards always have pretty cool looking designs.

 

[Chumley]

Yep a accumulations of funds, spent throughout those years. For the most part, spread out over months and in-between dry spells.



Why the hell do folks keep saying this nonsense? There is FACT and then there is FICTION. This is not skepticism at its core, this is a an agenda. Especially when they want to circumvent evidence to the contrary with baseless opinion.


Just say that you have nothing to add. None of this "Both sides are the same" cope out.

Since that's inherently false. I'm trying to debunk bullshit and obvious double standards. Not encourage balatant ignorance and unreasonable bias's. Beacuse it seems to rear it's ugly head everytime something "bad" happens in relation to SC or a delay happens. The hyperbole gets taken up another notch.

One side cites researched counter-agruments. While the other side cities circumstantially linked events, alongside conspiracy theories. Mixed with some vaild criticisms here and there. Right up still the point that it gets over-shadowed by the latter.

That's the risk with game development and crowed funded games in general so....

I mean CIG is very, very upfront about the pitfalls of this and they were caught by said pitfalls in 2014 and 2015. Factors that may have halted or put a game in development hell for years behind closed doors or under a publisher.




Some the stuff in this thread and the thread that started this is not cricitsm. If you believe that then you don't undestand what criticism is. I mean the community itself knows what to criticize and do it on a regular bases. I'm calling out bullshit like the false reporting that loan got and the other bullshit.

(baseless board statements don't do anything of merit)


What is this apologist bullshit tag? what the hell i'm i or others apologizing for? i thought that was called researched counter-agruments. I have no idea why you are trying give it a double negative type label. You want to excuse ignorance by allowing the ignorant few to side-step, anything that looks like a reasonable explanation. More so if they just think it's a scam or will never come out.

Like what discussion can you have with that? none. Other then citing sources rebuking it.


So don't you dare. Try to guilt trip me on anything.

Take a deep breath and relax.

 

[Zambayoshi]

Also

What company or studio or business or independent party. Releases their budget? or expenses or anything related to do that in full?

Damned if you do Damned if you dont.

http://ar2016.frontier.co.uk/

If CIG did something like this, it would calm a lot of people down.

Instead you get secrecy (for a so-called open development) which naturally triggers people's suspicions.

So when CIG says 'Everything's normal. Nothing to worry about" people are less likely to believe it due to the secretive nature of the company.

The fact that so many deadlines have been missed leads people not to take CIG's word for anything any more.

You may have faith in CIG but many don't.

 

[Primus]

Linking to a Reddit post from an investment banker:

So, the data I have available for comparison is all from private companies, meaning I can't divulge names and details due to SEC and FINRA regulations. Public companies would just issue an unsecured (no collateral) bond and be done with it. Collateralized loans are more common and help a company obtain a lower interest rate than an unsecured line of credit would. The loan agreements I have all state LIBOR/US Prime Rate plus 0.5% to 1.0%.

Last year, CIG was owed a tax credit of £3,319,220. 2015 was £3,115,774, so I'll just average it to about £3,200,000 for simplicity. Now, CIG could be sending this over from the US, but the exchange rate over the past year has been all over the place, to the tune of .75 to .82 GBP per USD converted. Note that this conversion rate means the lower ratio is, the weaker the Dollar is to the Pound. Rather than risk losing money to a volatile conversion, F42 opted to take the advance on their tax credit and minimize the loss.

(It occurred to me, that my original example is more a systemic issue with accounting at my bank, because front office people like to book GBP transactions in a US denominated computer system. So, while this explanation works on my end since I'm the one going in to fix it almost every week it doesn't reflect the economics of the transaction. Bear with me while I flesh out the exchange rate gain/loss piece and work at the same time. See clarification at the end)

Edit 3: Going back and looking at it, the interest rate is a base of 0.25% plus 2% for 2.25%, so the interest would be £72,000. Either way, a high-interest/risk loan is classified as 5% or above, so Derek is lying through his teeth on that one.

Clarification on exhange gains/losses: Let's get down to the nitty gritty and revisit my comment on the volatility of the USD/GBP exchange rate. This pertains to cash and equivalents held in foreign subsidiaries. The exchange gain/loss is a way to track the change in value of cash in hand versus your home currency, assuming you don't spend it.

More assumptions: We are only dealing with the £3,200,000 and F42 holds onto it through 6/23.

Let's look at a simple example. Let's say CIG gives F42 all the cash it needs at the beginning of the year.

CIG gives F42 the cash upfront at 1/1. The conversion rate at 1/1 was 0.81, so they would transfer $3,950,617 over to F42 for £3,200,000. No loss would be recognized, since they are still holding the cash. If they turned it back around on Jan 1, they could still get $3,950,617.28. On 6/23, the conversion rate is .79, so that's an exchange loss of 0.02 per dollar. CIG would report an exchange loss of ($3,950,617-$4,050,633) = $100,016 on cash held, or £79,012.64.

So, looking at the interest of £72,000 from Edit 3, it seems pretty close. So why take the loan?

Look at the how much the pound has moved in just the last year. CIG isn't giving F42 all of their cash at the beginning of the year, they are most likely giving it on a monthly basis, which means the conversion rate is all over the place, while the F42 operating expenses would be relatively flat. No company wants that kind of uncertainty, especially with Brexit in full swing. It's better to lock in a fixed rate on your (relatively) fixed expenses. Still a no-brainer. The pound is still stronger than the dollar.

 

[Armaros]

Linking to a Reddit post from an investment banker:

So people trying to claim that the interest would vastly out scale the savings from not doing currency conversion don't know anything about finance or can't read newspaper for one of the biggest international stories of the last year, Brexit? Anyone here want to try to find a loan on 21% interest from a reputable bank?

 

[Cabbagehead]

http://ar2016.frontier.co.uk/

If CIG did something like this, it would calm a lot of people down.

Instead you get secrecy (for a so-called open development) which naturally triggers people's suspicions.

So when CIG says 'Everything's normal. Nothing to worry about" people are less likely to believe it due to the secretive nature of the company.

The fact that so many deadlines have been missed leads people not to take CIG's word for anything any more.

You may have faith in CIG but many don't.

Okay good for them...CIG does more then enough, have no idea what you think they are SO secretive. You can visit the damn offices, they interact with their community. Also Foundry 42 already releases it's record per UK law, but they don't advertise them. In either case only the folks that want to start stuff, are looking for their financials. We are looking for the game, they've crowdfunded a lot. I have to trust them to use are money wisely and from the looks of it, they are. Also don't sit there and act like Frontier game's is rainbows and sunshine.

I mean who cares about those "many" people. They haven't backed or who cares if they don't trust CIG. They don't matter, there are 5 billion people on this planet, lots of people already brought in and growing. Plenty of interest to go around.

Also who are these "it would calm a lot of people down" please point me to them? scratch that your whole point is moot...Frontier is a publicly traded company. CIG is private, hence why the privacy in regards to their financials.

Take a deep breath and relax.

I was relaxed. Have no idea what you'd think otherwise. Just being blunt.

Great counter-argument.

 

[Human Resources]

I work with government tax credits every day.

When pursuing a tax rebate from such an entity, a company has to provide clear evidence that an agreed upon amount of development funds is spent in the region before the grant is approved, generally. This means that CIG is keeping meticulous accounting records, or hiring a reputable UK firm to do so. The tone of the comment also suggested that they are clearly confident that the rebate will go through smoothly (he uses the word "unthinkable" here), which insinuates that everything is in good order.

I would be surprised if any of CIG's international studios aren't operating under similar circumstances with their respective governments. As entertainment budgets increase, these grants become more and more attractive because the amount of new spending in the local economy (as well as an influx of generally wealthy, well educated tax-paying employees) dwarfs any disbursed rebate funds, provided that the company isn't using the monies for dishonest means (illegally selling rebates, intentionally misinforming on expenditures, shit, even money laundering, it's not unheard of).

Now run all of the financial conspiracy theories about Star Citizen through that filter. I don't think CIG is misusing their rebate agreement in a scam or graft, nor do I think so with their crowdfunded income, because that funding will be more and more accurately cataloged and traceable as the rebate accounting paperwork accumulates.

The Government sends Auditors to Get All Up In Your Shit. So basically fanboys, the Federal and State Governments of Multiple Nations will definitely verify whether or not "Star Citizen is a scam." Please do everyone else a favor and leave it up to them.

 

[Zambayoshi]

Linking to a Reddit post from an investment banker:

Let's assume they did it at Friday's (6/23) conversion rate (about 0.79). They could move $4,050,633, which would convert down to £3,200,000 for an accounting loss of $850,633.

I think this is misleading. An on-paper 'loss' from conversion is irrelevant when you are talking about an ongoing operation that will require such conversion regardless of the tax credits. The tax credits will merely delay the need for the conversion.

F42 wants to get an advance on the tax credits to delay the need for further funding from the US.

The interest component is the price of doing that.

Since F42 consumes ~$2m per month, the tax credit will only fund it for a couple of months.

So, paying interest in order to delay the need for further US funds by a couple of months? Doesn't sound too controversial.

The real question is why there's a need to delay the injection of further US funds. Presumably development is going to continue after those couple of months and CIG will need to pump further funds (for a long time to come) into F42.

Is the interest paid on the loan more than offset by the (presumed) return that CIG would get by keeping its US$ invested for a couple of months?

I see it as swings and roundabouts - I don't see any massive saving or expense.

It's curious though that CIG thought the loan was critical enough that it agreed to a floating charge over (almost) all of F42 assets. Perhaps it considers the risk of default to be so low that the collateral is not in danger.

 

[Cabbagehead]

The Government sends Auditors to Get All Up In Your Shit. So basically fanboys, the Federal and State Governments of Multiple Nations will definitely verify whether or not "Star Citizen is a scam." Please do everyone else a favor and leave it up to them.

We won't have to care. Because they aren't a scam.

Pretty sure there's a vetting process to this. Especially with Queens bank.

 

[Armaros]

We won't have to care. Because they aren't a scam.

Pretty sure there's a vetting process to this. Especially with Queens bank.

Yeah this bank doesn't mess around. Its ancient and well known.

 

[Elvin Atombender]

Linking to a Reddit post from an investment banker:

How does converting $4,050,633 to £3,200,000 result in a loss of $850,633?

It doesn't sound like it came from a banker.

 

[Zambayoshi]

How does converting $4,050,633 to £3,200,000 result in a loss of $850,633?

It doesn't sound like it came from a banker.

As far as I know the forex losses (if any) would be caused by entering a liability and one exchange rate and then paying the liability at another rate.

The same could be true if F42 is owed a tax credit which would convert to a US$ amount. It would be entered as US$ on CIG's books at one exchange rate, but when the credit was actually paid to F42 it could have a different exchange rate, resulting in a forex conversion gain/loss.

The issue is that you'd expect the tax credit to be retained by F42 in lieu of further funding injections from CIG for around 2-3 months, meaning that no exchange would be necessary. F42 would have pounds in the bank to pay pound liabilities, rather than needing CIG to convert US$ to pounds.

There's nothing really controversial about the transaction, but the need for it in the first place is curious, when you'd expect that F42's funding would be in place for at least the next 12-18 months. 2-3 months' worth of funding, whether it comes in now, or whether it comes in 6 months down the track, shouldn't be an issue.

 

[Vash63]

As far as I know the forex losses (if any) would be caused by entering a liability and one exchange rate and then paying the liability at another rate.

The same could be true if F42 is owed a tax credit which would convert to a US$ amount. It would be entered as US$ on CIG's books at one exchange rate, but when the credit was actually paid to F42 it could have a different exchange rate, resulting in a forex conversion gain/loss.

The issue is that you'd expect the tax credit to be retained by F42 in lieu of further funding injections from CIG for around 2-3 months, meaning that no exchange would be necessary. F42 would have pounds in the bank to pay pound liabilities, rather than needing CIG to convert US$ to pounds.

There's nothing really controversial about the transaction, but the need for it in the first place is curious, when you'd expect that F42's funding would be in place for at least the next 12-18 months. 2-3 months' worth of funding, whether it comes in now, or whether it comes in 6 months down the track, shouldn't be an issue.

Why would you expect them to have funds in place? As the initial letter says, F42's only revenue source is money coming from CIG as they don't directly sell anything. They're reliant on a constant payment from CIG to F42. I think the only thing this entire deal means is that it was cheaper to advance their tax payment than wait until it comes in next year because CIG doesn't have to dip into their own USD/EUR funds for a few extra months.

 

[Wereroku]

Why would you expect them to have funds in place? As the initial letter says, F42's only revenue source is money coming from CIG as they don't directly sell anything. They're reliant on a constant payment from CIG to F42. I think the only thing this entire deal means is that it was cheaper to advance their tax payment than wait until it comes in next year because CIG doesn't have to dip into their own USD/EUR funds for a few extra months.

CIG is so cash flush you would think instead of getting the loan they would just transfer enough funds to pay salaries for the next year instead. I mean if it is to pay salaries after this rebate is expended they will have to transfer the money anyway since F42 brings in no revenue.

 

[Vash63]

CIG is so cash flush you would think instead of getting the loan they would just transfer enough funds to pay salaries for the next year instead. I mean if it is to pay salaries after this rebate is expended they will have to transfer the money anyway since F42 brings in no revenue.

This is answered in the OP:

"Given today's low interest rates versus the ongoing and uncertain currency fluctuations, this is simply a smart money management move, which we implemented upon recommendation of our financial advisors."

Should we doubt that Apple is flush with cash because they took a $6.5bn loan in 2015?

 

[Primus]

How does converting $4,050,633 to £3,200,000 result in a loss of $850,633?

It doesn't sound like it came from a banker.

He made some fairly major changes after I copy-pasted it. Just pasted in the new text, so folks will need to go back and re-read.

EDIT: And his reasoning:

I went back and updated. I was looking at it from my every day work, which is people putting GBP transactions in a USD system, which means I have to go in and fix it. That's not representative of a foreign exchange transaction.

 

[Zambayoshi]

Why would you expect them to have funds in place? As the initial letter says, F42's only revenue source is money coming from CIG as they don't directly sell anything. They're reliant on a constant payment from CIG to F42. I think the only thing this entire deal means is that it was cheaper to advance their tax payment than wait until it comes in next year because CIG doesn't have to dip into their own USD/EUR funds for a few extra months.

I wouldn't expect F42 to have the funds in place but I would expect to have the funding (arrangements) in place, so it is not looking behind the couch cushions or going cap in hand to CIG every month asking for a top-up.

I agree with you about advancing the tax payment, but the question is why? Those funds would barely keep F42 going for 2-3 months. The answer can only be that there was a need to relieve CIG of short-term funding pressure. The question to that is, why is there a need to relieve that pressure?

 

[Wereroku]

This is answered in the OP:

"Given today's low interest rates versus the ongoing and uncertain currency fluctuations, this is simply a smart money management move, which we implemented upon recommendation of our financial advisors."

Should we doubt that Apple is flush with cash because they took a $6.5bn loan in 2015?

Yes but a few months from now it is still going to be fluctuating. It is just an odd move for the company since they are going to have to transfer more money soon anyway.

I wouldn't expect F42 to have the funds in place but I would expect to have the funding (arrangements) in place, so it is not looking behind the couch cushions or going cap in hand to CIG every month asking for a top-up.

I agree with you about advancing the tax payment, but the question is why? Those funds would barely keep F42 going for 2-3 months. The answer can only be that there was a need to relieve CIG of short-term funding pressure. The question to that is, why is there a need to relieve that pressure?

I wonder if they have some of their cash in bonds or another form of investment? Any company I have ever dealt with didn't like to keep very large sums of money in their account if they are stable. The return/early penalty could be enough to encourage something like this.

 

[NipplesAndToes23]

I have no idea what this means, but I feel like I should because it might come in handy someday.

 

[ElyrionX]

This is answered in the OP:

"Given today's low interest rates versus the ongoing and uncertain currency fluctuations, this is simply a smart money management move, which we implemented upon recommendation of our financial advisors."

Should we doubt that Apple is flush with cash because they took a $6.5bn loan in 2015?

That's a bullshit statement.

CIG is essentially still a startup relying on crowdfunding as its only source of cash inflow. It is not financially prudent or smart for such a company to be taking on debt if it does not need them. Taking out a loan against a future income stream reeks of desperation since that GBP they expect to receive from the UK government can always be used to fund future operations.

With the GBP having fallen so much now, their USD will go even further in the UK which makes even more sense to be sending USD to find the operations right now. If they are concerned about currency volatility, it is not hard to be just making monthly remittances to the UK office instead of one big annual lump sum.

Finally, Coutts is a private bank and not your traditional corporate bank. Their cost of funds is higher which means that the interest rate they charge to clients (ie. CIG) is higher as well. Why CIG didn't just go to any of the larger corporate banks is anyone's guess but I see nothing good here. The bank probably made out like a bandit with the fees they charged on that structure.

Overall, this is a red flag, IMO. Wouldn't surprise me if CIG has cash flow issues.

Also, there is a lot of financial illiteracy going on in this thread. So many people who don't know jack shit about finance making all kinds of ignorant remarks.

 

[Pepboy]

I think this is misleading. An on-paper 'loss' from conversion is irrelevant when you are talking about an ongoing operation that will require such conversion regardless of the tax credits. The tax credits will merely delay the need for the conversion.

F42 wants to get an advance on the tax credits to delay the need for further funding from the US.

The interest component is the price of doing that.

Since F42 consumes ~$2m per month, the tax credit will only fund it for a couple of months.

So, paying interest in order to delay the need for further US funds by a couple of months? Doesn't sound too controversial.

The real question is why there's a need to delay the injection of further US funds. Presumably development is going to continue after those couple of months and CIG will need to pump further funds (for a long time to come) into F42.

Is the interest paid on the loan more than offset by the (presumed) return that CIG would get by keeping its US$ invested for a couple of months?

I see it as swings and roundabouts - I don't see any massive saving or expense.

It's curious though that CIG thought the loan was critical enough that it agreed to a floating charge over (almost) all of F42 assets. Perhaps it considers the risk of default to be so low that the collateral is not in danger.

Thank you. I was too lazy to type why the reddit post was misleading. Even if thats how accountants totalled things, which I doubt,
it's not very relevant. For example, iif they had done this in Korea the paper savings would be 2 million dollars minus 60 million won?

Or if they had exchanged dollars into pennies, 2 million dollars minus 200 million pennies would be a loss of 198 million pennies? You don't subtract​ one currency from another and say "case solved!"

 

[Zambayoshi]

I wonder if they have some of their cash in bonds or another form of investment? Any company I have ever dealt with didn't like to keep very large sums of money in their account if they are stable. The return/early penalty could be enough to encourage something like this.

That's the likely reason, but funding has dropped off alarmingly in the last 6 months. They no longer make enough from backer funding alone (according to their site) to fund their studios. The shortfall must come from cash reserves, investments or loans, at least until they can do their annual appeal.

 

[Wereroku]

That's the likely reason, but funding has dropped off alarmingly in the last 6 months. They no longer make enough from backer funding alone (according to their site) to fund their studios. The shortfall must come from cash reserves, investments or loans, at least until they can do their annual appeal.

So it's probably a liquid cash issue more then anything. That means they probably have some investments ending in the next couple of months that will improve their cash on hand.

 

[ElyrionX]

So it's probably a liquid cash issue more then anything. That means they probably have some investments ending in the next couple of months that will improve their cash on hand.

Lol wut. Companies that have cash flow issues don't make any form of "investments", let alone illiquid ones.

 

[Zambayoshi]

Lol wut. Companies that have cash flow issues don't make any form of "investments", let alone illiquid ones.

Badly managed companies might

 

[Wereroku]

Lol wut. Companies that have cash flow issues don't make any form of "investments", let alone illiquid ones.

Huh? I didn't say they had cash flow issues. I was talking about why they might have less cash on hand at the moment. That would explain why they are taking it a loan that will only last a few months. Maybe I am just not used to a company the size of cig but most of the ones I have dealt with like to invest their excess cash instead of just having it sit in a corporate bank account.

 

[Zalusithix]

That's the likely reason, but funding has dropped off alarmingly in the last 6 months. They no longer make enough from backer funding alone (according to their site) to fund their studios. The shortfall must come from cash reserves, investments or loans, at least until they can do their annual appeal.

No, it hasn't if you're aware of the general monthly trends.

2017 is within rounding errors of 2016's income at the same time frame when you consider it's a crowdfunded project. The end of the year always pulls in far more money.

 

[Zambayoshi]

No, it hasn't if you're aware of the general monthly trends.

2017 is within rounding errors of 2016's income at the same time frame when you consider it's a crowdfunded project. The end of the year always pulls in far more money.

Yeah, that's what I was referring to (annual appeal) although if they are aware of the cyclical nature of the backer funding, which is a reasonable assumption, it also stands to reason that they would have set enough money aside to continue funding the studios through lean months. Makes it more curious that they'd need to get an advance on the tax credit.

 

[Starbuck2907]

I'm psyched for 3.0. I'll let the haters, who probably have zero $$ invested in the game anyway, worry about the company ripping me off. You guys can carry that water for me while I enjoy the game we have so far.

 

[ElyrionX]

I'm psyched for 3.0. I'll let the haters, who probably have zero $$ invested in the game anyway, worry about the company ripping me off. You guys can carry that water for me while I enjoy the game we have so far.

Lol. The haters can play the game on day one if it turns out to be good; I know I will. And no, you did not invest in the game (lol) since that implies returns of some kind. You only paid for a half-baked product that you hope will become fully developed one day.