Platinum buys Wowio — Updated
According to these SEC filings Platinum has completed its purchase of Wowio, using shares valued at .15 cents.
The sales agreement has also been filed and includes this little nugget:
TERMINATED CONTRACTS
All WOWIO contracts in existence prior to the Closing other than the Material Contracts
Looks like current WOWIO partners may be undergoing some changes in their contracts.
UPDATE: This is obviously a big story, but one that’s hard to track during our own little Hell Week. However Christian Scott Sava spoke with Wowio President William Lidwell and posts the gist of their conversation:
One thing I found out is that a lot of rumors and such that go around the web could NOT be rebutted due to the fact that Platinum is a publicly traded company. The red tape and dealing with the SEC makes it impossible to reply to every accusation and rumor.
That being said…while from what I hear of Platinum and their financial situation isn’t giving me a warm fuzzy feeling…what I heard from Will today set my mind at ease. I think this is a good thing for US.
Us being the publishers and their fans.
07/18/08 at 12:46 pm
I just posted last night about a 2 and a half hour conversation with Will Lidwell (president of Wowio) and the contracts stay. Only an addendum is being added to include new features.
Platinum won’t have anything to do with the Wowio contracts or anything lik that.
Feel free to read more on my site. But I was really impressed with Will’s patience in answering all of my questions and concerns.
07/18/08 at 1:25 pm
Is that inside information they shouldn’t be leaking out on the phone? They should be careful.
07/18/08 at 2:50 pm
I find the entirety of the situation highly troubling. Why would Wowio agree to a equity-laden deal with a company whose stock is ALREADY on the bulletin boards and, by the way, is trading at $0.10 per share as I type this. My experience tells me that the Wowio founders must have been in their own financial malaise, as well. That, or they have far more confidence in the value of Platinum equity than the rest of us.
07/18/08 at 3:47 pm
So with the deal valued at $3,150,000 based on $0.15/share, and with Platinum currently trading at $0.10/share, the deal is actually worth $2,100,000 (although the stock is being issued to the 2 WOWIO principals in three parts, with the possibility that the number of shares issued in the next two parts could be smaller, which would take the value back up toward the $3.15M valuation– the value per share will be based on whatever it’s trading at when the next two tranches are issued, but a minimum of $.015/share).
That is assuming that the WOWIO principals could liquify their shares. Not knowing what kind of revenues WOWIO has, it’s hard to tell whether $2.1M is a good value for the site. But considering the $600K earn-out that’s written into the agreement, it seems likely that it’s a fairly generous valuation.
And why not give a generous valuation? Platinum isn’t paying any cash on the deal, so they might as well offer a pretty decent chunk of stock.
If I was a WOWIO principal, I’d worry about that earn-out. If they have $50K in revenues for two months, they’ll get $150k, and there are tranches up to a possible $600k… I’m not sure I’d like the chances of Platinum having that kind of cash available when the time comes.
07/18/08 at 7:16 pm
Maybe to the owners of WOWIO are just getting theirs while they can.
07/18/08 at 7:39 pm
I’m just waiting to see Platinum put out the rest of the books that are currently late or if they’re gonna go directly to Wowio and I can start asking for credits for comics that will now not appear.
07/19/08 at 8:47 am
[…] Ace reporter Heidi MacDonald tracks down an SEC filing that indicates that Platinum has indeed bought Wowio. Scott Christian Sava talked to William Lidwell, the president of Wowio, and came out reassured. It sounds like the model will change a bit: Books will be offered for free viewing or for pay, and readers outside the U.S. can now access the comics. […]
07/19/08 at 8:56 am
All I’m saying is…
After speaking with William Lidwell (who’s been an up and up guy for the last year I’ve had my books up on Wowio) I got the impression that Platinum will in NO way be involved with Wowio.
Not financially.
Not on the day to day business side.
And DEFINITELY not involved in our properties.
I and many of my fellow creators/publishers who have put their work up on Wowio have or ar selling our properties movie rights to studios, game rights to game companies, and so forth.
IF there was even a HINT of Platinum (or anyone) sniffing around our copyrights…we’d be long gone.
I’m in no way a spokesperson. I just happen to have had the opportunity to sit and have all of my questions asked by Will.
Take it for what it’s worth.
For the record. I was planning on leaving as well. Once I heard about Platinum. All of us pretty much were.
But we decided to “see what happens”.
We’re still doing that. We’re taking it one step at a time.
07/19/08 at 8:40 pm
How can the company that owns the Wowio site NOT be financially involved? That’s impossible.
07/21/08 at 6:59 am
[…] [Top Story] Heidi MacDonald reports that Platinum Studios has completed its purchase of online e-publisher Wowio, according to a recent Securities and Exchange Commission filing. Platinum is paying for the purchase with its own stocks, bringing to mind a comparison with last decade’s merger between Tundra and Kitchen Sink, a situation that would eventually lead to the company’s downfall. […]
07/21/08 at 7:06 pm
[…] Missed It: Platinum Buys Wowio As expected, Platinum Studios purchased the digital delivery service Wowio in an announcement that came to light last Friday. As rumored, this involved a swapping of stocks rather than an outright cash purchase. As feared, this brought a termination of certain contracts. As insiders were aware, the reports of cartoonists making significant five-figure sums from the service may shock some of those that didn’t really follow the company. As hoped for, creators involved with Wowio seem temporarily satisfied they’ll be left alone. As mentioned by a few pieces of analysis about the potential for such a sale, a way of publishing their licensed material without the brutal sales figures and sunk costs of paper comic book production makes a lot of sense for Platinum. As I’m not exactly aware of all sources for such news, I can’t be certain or not whether anyone has provided cogent analysis as to why the sale was attractive to the Wowio folks or what exactly precipitated tremors in their model that preceded the sale. Kidding aside, this is perhaps the epitome of a wait-and-see story. While the deal makes a certain amount of sense and there’s nothing that specifically screams danger, Platinum’s financially precarious position and the past record of at least one of its principals casts some doubt into the whole affair. While initial word back on the amended situation and the resulting contracts has been positive, or at least not negative, I’ve heard about multiple creators wanting to pull their strips when Platinum’s interest was initially announced. (Also working in Platinum’s behavior are positive reports about their handling of DrunkDuck creators.) In fact, the option to do so may be an important part of these new contracts. Since they plan to relaunch immediately, by the 10th of August at the far end of things, we should have a better idea of how much of their former business has survived into this iteration. […]
07/24/08 at 8:04 am
[…] Then they were acquired by generally shady Platinum. Even if you don’t mind the ethics, Platinum lost over $5 million last year, mainly because their business plan appears to be “acquire comic properties, don’t publish them, hope someone gives us lots of money to make them into movies”. This is not a mature business plan. A financial analyst speaking generally about publishers said movie and video game deals are typically seen as one-time windfalls, not a bankable business strategy. And the auditor’s going-concern warning took into account Platinum’s future business plans. Much of Platinum’s financial challenges owes to the company’s spending, which one former employee called “outrageous.” […]
07/30/08 at 1:46 pm
WOWIO Countdown is on!
July 29, 2008 Uncategorized No Comments
As we edge closer to the relaunch of the Wowio website this Thursday, we are getting more and more excited about it. We have had some great response from publishers in both the comic book and traditional book segments and we are looking to add some new categories that will really enhance the offering for readers. The new revenue model should make it very attractive for publishers to add a supplemental revenue stream from a truly global distribution outlet. Some of the restrictions on downloads were self-imposed and others were restricted by pre-established agreements that some publishers had with their distributors. We think we’ve solved that problem with the new ad-supported preview section.
In addition to offering multiple opportunities for distributing content, we are also looking to bring some brand building into the equation here as well. We think our audience will want to see extensions of their favorite brands and so we are envisioning an extended e-commerce storefront where our publishers can offer other wares and products to expand their reach to their readers and fans. Of course, this is all part of the next iteration of Wowio…first, we relaunch Thursday with new features, more publishers, additional categories, and an expanded global audience. We are excited about this new world of possibilities for Platinum, the Wowio team and our publishing partners.
Explore the new Wowio experience starting at 9:00 am PST, this Thursday, July 31, 2008 at www.wowio.com.