Financial Shenanigans – The Financial Fiasco
About the most ridiculous argument the World of Tanks shills throw in everybody’s face constantly is, “With all the billions Wargaming makes, they don’t care about you!”
This argument gets thrown into the face of anybody that quits the game or criticizes it out of absolute frustration. There’s only one problem with that argument: It’s completely made up.
In order to understand just how off base and completely bogus that argument is, one just has to do a little homework and due diligence. Once one does that, one can only come to one conclusion:
Wargaming is about as crooked a company as you’ll ever come across.
That, unfortunately, is a fact. With the tactics Wargaming employed, they make ENRON look like the Boy Scouts. This story gets a bit long, and sadly there is no “too long / didn’t read” for it. That said, here we go:
Back when Wargaming was developing World of Tanks, which would become it’s biggest (and lets face it, ONLY) money maker, they were really at their financial ends. The select group of private investors had sunk pretty much all they could into it. It was at this point that these same investors were looking to branch out into different areas – namely: real estate.
Well, any business man can tell you that there’s only so much money to go around, and when it’s your money, you limit spending it any chance you get. It’s always better to spend someone else’s money than it is yours; that way, if something should go south, they lose their money, you walk away with yours still intact.
So what can a privately held business do to get more financing when they’ve pretty much run out of collateral and have hit their limit with financial institutions?
Get listed on the stock market. And that, friends, is exactly what Wargaming did.
Now, in order to get listed on the Cyprus Stock Exchange, Wargaming had to not only disclose all of its assets, but also how much money it was making at the time and project how much money they were going to make in the future. It’s standard operating procedure for pretty much every stock exchange on the planet.
Wargaming did exactly that on October 25, 2011. You can find Wargaming’s Stock Exchange Filing here.
Now, at this point, it should be noted that everything is above board, or so it seems. The only real issue is looking into this filing one finds some interesting tidbits of information. Namely, the value they are placing on their stocks vs. how much they’re projecting they’re going to make. Here’s what Wargaming said they were worth:
- 3,400,000 shares @10C each minimum value and 1€ already issued.
In other words, they’re saying that all of the shareholders combined have 3,400,000 shares that they value at 1€ each. It also states that no matter what, they have a minimum value of 10C (or about 11 cents U.S.)
Then, they float another 10,000,000 shares as authorized share capitol at 10C as well. So, at this point, what we have are 13,400,000 shares with a minimum value of 1,340,000€ or $1,474,201.
So where’s the billions you ask? Well, they simply don’t exist at this point. As they say on those TV sale ads though, “But wait! There’s more!”
Then you read just a bit further and you find this
All of the New Ordinary Shares will, upon Admission, rank pari passu in all respects with the existing Ordinary Shares in issue at the date of this document including the right to receive all future dividends and other distributions declared, paid or made in respect of the Ordinary Shares after Admission.
That’s a pretty neat trick, isn’t it? So this is probably the part where you ask, “Why do this?” Well, here’s what Wargaming themselves said in that very same document:
GOALS – TARGETS – PROSPECTS – BUSINESS PLAN – FUNDRAISING
Reasons for Admission
The principle reason for the Listing is to operate under a proper EU structure, which will allow the Company to pursue its aggressive expansion drive correctly. The Company intends to utilize to the full the tax advantages that Cyprus offers and this is already much in evident for billing in the EU and paying EU’s lowest VAT rate in Cyprus. Furthermore, by being a listed company on a recognized EU member stock exchange such as Cyprus, the Company will be in a position to enter into Mergers & Acquisitions, either by cash or through issue of shares to reach its objective of accelerate growth of its core business as well as expansion into new markets, especially in the emerging countries. For 2012, the Company intends to intensify its efforts to penetrate the US market while in 2013 the aggressive expansion into China will be implemented.
Sounds legit, does it not? The reason this statement is relevant is because the argument made by all the World of Tank shills and trolls is that they don’t care, that they don’t need the EU, that they are so rich they don’t need anybody. So how could they not care when they just said they do and did some very creative valuation to do exactly that? We’ll get back to that a bit later.
So where is all this money? Well, lets start by taking a look at what Wargaming had done at this point in time and what they actually hoped to do. Here is their Projected Cash Flow Statements for years 2011 to 2014:
Share Capitol Issue
Total Cash Inflows
Total Cash Outflows
Net Cash Inflows
So once again the question becomes, “Where’s the billions?” In short, there aren’t any. There never were any. That’s just more completely made up junk by the World of Tanks shills and trolls.
So what in fact did happen? Well, this is where it all goes pear shaped. The next time we get an official financial statement from Wargaming is in April of 2013, a year-and-a-half later. So what does it tell us? Well, it tells us that something very, very suspect is going on at the very least.
The only numbers we have that cover an entire year on this report, or for the entire history of Wargaming for that matter, is 2012. So lets all take a look at how the actual numbers from 2012 stack up to the projections they made for 2012 back in October of 2011:
Share Capitol Issue
180,274 (Sundry Income)
Total Cash Inflows
Total Cash Outflows
Net Cash Inflows
This is where anybody in their right mind sits up, looks at this, and says, “how in the name of all that is holy did THAT happen?”
It is, at best, laughable on its face. So laughable in fact that it begs a closer look by the likes of Interpol. So what the hell happened in 2012? That’s a good question and it deserves a good answer.
What we know is that in 2012, immediately after getting listed, Wargaming went on a spending spree. In August of 2012, they bought the Big World engine that powers their games for $45,000,000. That’s a good chunk of change. Then in January of 2013, they bought Day 1 Studios for another $20,000,000. Just one month later in February, the purchased Gas Powered Games for an undisclosed amount.
So, if we go back a very short time in history to October 2011, and we roll forward just one year, Wargaming somehow increased it’s capital value by 1,382 percent!
Not even Bernie Madoff managed to do that. It’s an increase so incredible that it’s…well…incredible.
Remember that TV deal? But wait! There’s more!
After the financial report of all that money in April of 2013 that covered full year 2012, Wargaming would never, ever again file one single financial report.
Around the end of 2013, the Cyprus Stock Exchange began wondering what the holdup was with Wargaming filing it’s financial reports. By the spring of 2014, all Wargaming stocks were frozen from trading until such time as Wargaming came clean and caught up with all of the financial reports it had failed to file.
Wargaming never filed a single thing. By December of 2014, Cyprus had had enough. Wargaming stocks were kicked off the Cyprus Stock Exchange and they’ve never been listed anywhere ever since.
Now, to hear the corporate shills tell it, Wargaming did all of that on purpose because they don’t need the EU Stock Exchange and have more money than God. What’s even more ridiculous are some of those same people spreading stories about Wargaming grossing 500,000,000 dollars last year.
Those stories are, of course, completely false. They are fabricated based on the increase of the original projections and the financial report of 2013 that was never validated at all by any follow up reports.
In the end, Wargaming on its face looks exactly like ENRON, Bernie Madoff, Lehman Brothers, and other “cook the books” companies. All it takes is one good valuation done with “creative” accounting, and then you just ride out financing for as long as you possibly can.
It remains to be seen just how much longer Wargaming’s ride is going to last, but with the complete and epic failure of World of Warplanes, and the lackluster success of World of Warships as well as the decline in player base of World of Tanks, it in all likelihood is not going to be for much longer.