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By this Motion, Valence seeks entry of an order: (a) shortening the notice period with respect to the objections to the Disclosure Statement; and (b) scheduling the Disclosure Statement for consideration at the hearing scheduled for September 18, 2013 at 10:00 a.m. (Central).
Valence proposes that any objections or other responses, if any, to the Disclosure Statement will be filed on or before September 11, 2013 at 5:00 p.m. (Central).
J. Retention of Investment Bankers and Pursuit of Exit Financing
Accordingly, in December 2012 the Debtor began interviewing investment bankers to help it find the needed exit financing. Officers of the Debtor requested proposals from approximately 10 investment banking firms, ultimately selecting and receiving Bankruptcy Court approval by Order dated February 15, 2013 to retain KPMG Corporate Finance, LLC (“KPMG”) and Roth Capital Partners, LLC (“Roth”) with a mandate to secure the needed exit financing for the Debtor.
Over the next four months, KPMG and Roth conducted an extensive marketing process canvassing a wide range of financial and strategic investors to provide exit financing for the Debtor. In this marketing process, KPMG and Roth reached out to over one hundred entities to find a suitor interested in financing the Debtor’s operations on a prospective basis. During that process, the Debtor contacted 32 financial and 74 strategic investors, sent management presentations to 13 entities, and conducted diligence reviews with five strategic investors. Although none of these strategic investors made a proposal for exit financing, two of them proposed an acquisition of the Debtor’s business. These acquisition proposals ranged from $25 million to an amount less than the amount required to pay in full the Berg & Berg Notes, the DIP Facility and the Administrative Expenses of the Chapter 11 Case.
Wow.
0.00660 (-71.55%) on strong volume (1,810,001)
is the company bk?
Alex, I guess you can help us put these info into a larger picture.
A simple offer to buy the company would not require Berg 'consent': you act as a stalking horse in an auction of the company.
Berg's alternative proposal is tough to decipher in lack of further info.
How to take this piece of news?
On June 26, 2013, the Debtor’s Board of Directors met to consider a proposed Letter of Intent submitted by a potential purchaser. As a precondition to acceptance by the Board, however, the Letter of Intent required the consent of the Debtor’s largest pre-petition secured lender, Berg & Berg Enterprises, LLC (“Berg & Berg”). That consent was not obtained, so the Debtor now requires additional time to negotiate an alternative plan of reorganization. Berg & Berg also submitted a proposal to the Debtor that would include exit financing, and the Debtor is currently considering Berg & Berg’s proposal as an alternative plan.
Exide is bk, too. Not interesting, at first sight.
If anybody knows something about the outcome of today's hearing, kindly share it.
http://www.bloomberg.com/news/2013-06-03/a123-installs-1-megawatt-battery-system-on-hawaii-electric-grid.html?cmpid=yhoo
Power storage is becoming a more important part of renewable-energy projects because they produce electricity intermittently, depending on the weather.
While the advanced battery industry has experienced a tepid start in West Michigan, one executive thinks the sector is just beginning to explore its market opportunities.
Despite overcapacity concerns and slow sales of vehicles featuring advanced batteries – not to mention a shakeout of some companies in the developing industry – MaryAnn Wright, the global vice president of technology and innovation for Johnson Controls Inc., believes the advanced battery industry still has a strong foundation from which to grow.
Speaking at a Lakeshore Advantage event held earlier this month at Michigan State University’s Bioeconomy Institute in Holland, Wright said JCI’s production of lithium-ion batteries pales in comparison to the 140 million lead-acid batteries it makes per year. However, the company is seeing growth in shipments to European customers of advanced batteries it makes in Holland.
...
The industry is also not without competition. LG Chem Compact Power Inc., which has a plant in Holland that is expected to begin production this fall after a string of delays, remains a formidable operation, Wright said, noting it is in the top three of global producers of lithium-ion batteries.
She expects strong competitors like LG Chem will be able to persevere as the industry develops.
Meanwhile, JCI continues to install incremental capacity for advanced batteries at its facilities as the customer base grows.
http://mibiz.com/news/energy/item/20646-jci-executive-says-despite-challenges-advanced-battery-industry-starting-to-turn-on
the more commercial success (and grants) JCI gets right now, the better.
it should also help prove one of our speculations: a combination of Valence + a big partner is the way forward to compete in the market.
Johnson Controls, the world's leading manufacturer of automotive batteries, will supply Lithium-ion batteries to power large plug-in hybrid trucks as part of a U.S. Department of Energy (DOE) electrification initiative.
About 120 work trucks, to be used by publicly owned utilities and municipal electric companies, will utilize advanced plug-in hybrid power systems by Odyne Systems, LLC, using Johnson Controls' batteries. Odyne, in conjunction with the Electric Power Research Institute (EPRI) and the South Coast Air Quality Management District of California, has been selected to participate in a $45 million dollar DOE grant.
http://www.prnewswire.com/news-releases/johnson-controls-to-supply-li-ion-batteries-to-power-hybrid-trucks-as-part-of-department-of-energy-program-award-210379861.html
The Chinese academician, Chen Liquan, told
reporter that, in the field of the lithium iron
phosphate battery and materials, two core patents
are impossible to bypass, one is the carbon coating
patent, the other is the carbothermic reduction. The
carbon coating patent has been applied in China and
Phostech is the sole licensee. The carbonthermic
patent belongs to Valence, but is not applied
in China.
this is taken from a Phostech's presentation:
http://www.phostechlithium.com/documents/PHEV09_MG_Phostech.pdf
No idea why the patent is not applied in China, but a competitor indicating a Valence patent as a core one is a nice indication of the strength of the portfolio.
Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del., on Monday signed off on the plan filed by the remnants of the battery maker left behind in bankruptcy. A123 filed for bankruptcy in October and sold its automotive-battery business for $256.6 million to Wanxiang America at a bankruptcy-court auction.
The battery maker's liquidation plan will pay unsecured creditors about 65 cents on the dollar, but it offers no repayment of more than $130 million worth of government-funded grants. The plan also will wipe out shareholders.
http://online.wsj.com/article/SB10001424127887323648304578497533845276220.html#articleTabs%3Dcomments
Exclusive: Bob Lutz, Chinese in bid to buy Fisker Automotive
VL Automotive and China's Wanxiang Group are looking to gain control of Fisker through a prepackaged bankruptcy. This comes alongside a separate push by investors in Europe and Hong Kong, including billionaire Richard Li, to buy out the U.S. Department of Energy's position in Fisker.
Wanxiang bought Fisker's lithium-ion battery supplier, A123 Systems Inc, out of bankruptcy.
http://finance.yahoo.com/news/exclusive-chinese-supplier-vl-automotive-174259758.html
It sounds like a reasonable possibility, although nothing is for sure until it happens in bk.
I see new posters and some hype on the board - I hope there's some ground to the renewed interest for the stock, and not just some day traders in worthless paper.
Wow. 24 messages and 2 million shares traded today.
May be not a sleeper any more.
Pity, it was a quite and interesting place here...
I love to complicate things: how about Berg remaining both as a major shareholder and the owner of part of the company's debt.
This way he may succeed in remaining a creditor of a stronger, better capitalized company (by someone else), and still a large shareholder in what he seems to see as (potentially) a key player in the battery sector for the future. With a major partner on his side, investing fresh money (instead of him).
If things go south again, he'll still hold the possibility to convert his credit into owning the company. If things go well, he'll benefit with little to no further investment.
>you guys dont know Berg, he couldnt care less about shareholders, I believe he will take every dime he can, if some pennies fall off the table he will laugh while others jump on them.
I'm sure he only cares about his own interest. The bet is on the fact that plan B is more attractive to him than plan A (own Valence completely with an obligation to keep spending money to compete with the big guys ).
Any money falling from the table will make me happy. ; )
Could an in-between solution be possible ? (I haven't evaluated the implications as to NOLs, etc., to be honest): Berg remains as a creditor and large shareholder of a healthier company, controlled by a majority stake belonging to a big name (say JCI).
I can see many reasons why it could be very difficult to realize, but also good reasons why it might represent a win-win situation for both parties (although the devil would be in drafting the details).
Small shareholders would be back in the black, by miracle.
I had a quick look at A123's bk, and it looks to me the shares are heading to zero.
Valence is potentially worthless paper, unless something happens that puts equity in the black - A123 looks worthless paper to me as the story has already unfolded.
Shares can still trade up and down, but AONE is history.
NEW YORK, NY and SHENZHEN, CHINA--(Marketwire - May 3, 2011) - Highpower International, Inc. (NASDAQ: HPJ), a developer, manufacturer and marketer of nickel-metal hydride (Ni-MH) and lithium-ion (Li-ion) batteries and related products, today announced that Mr. T. Joseph Fisher, III has joined Highpower's Board of Directors, effective April 30, 2011, and Mr. Chao Li has retired as director of the Board.
http://www.marketwire.com/press-release/highpower-international-appoints-new-independent-director-nasdaq-hpj-1509400.htm
he's been on the BoD since 2011.
DH works at a shiny new internet startup that loves to tout how there’s a scene in L.A. too, really, there is. See? We’re young and hip! He got an invite to a preview night for the uWink restaurant at Hollywood and Highland.
It’s date night, and we still haven’t figured out where to get a decent meal in L.A., so we jumped at the chance to try something new and geeky.
The restaurant doesn’t open for a few more days, and the preview night was intended to generate some hype, as well as work the bugs out of the system.
...
The overall concept is pretty cute. You get a wrist band at the door, and you get seated with your party around a table with touch screens in the middle. An adorable pixie of a waitress explained that she was our Entertainment Guide(?) for the evening, and how to order food so that everything came out in the order we wanted, and we could eat at the same time as the members of our party.
...
There was a table of guys with laptops, cables, and redbull huddled in one corner. At one point in the evening, the servers crashed and all the screens went blank (remember, this is a preview night). There was an audible “Awwww” across the restaurant. All of the (Mac) software reloaded quickly, and we were back in business soon. Shortly after dinner and the reboot, the waiters brought us appetizers, and then just told us to take them when we looked confused. Ten minutes later, we were brought duplicate main courses… the server(software) didn’t lose our orders, but it did reset them. I’m sure they’ll fix that before they open.
We sat with two other couples (they were only taking groups of four and six from behind us in line). One of the guys commented that this system would make for very easy inventory control inside the restaurant. Another girl in our party left without paying for her cosmo (food was free, drinks were half price for the preview). There weren’t waiters manning the tables, so I don’t think anyone at the restaurant noticed. I’m sure they’ll notice when they open.
The games were fun, and it would be easy to come to this restaurant to entertain people from several different age groups in one party. I’m sure we’ll be back with friends when the hype settles down. Especially for drinks.
http://www.bloggymommer.com/2008/06/15/did-uwink-at-me/
Not sure if it's already been posted:
>>uWink offers a variety of those same social experiences that Bushnell sees as essential to a game experience. And there's other news, such as new locations in Mountain View, California, and in Los Angeles at Hollywood and Highland.
"Probably the most important [aspect] is that we have decided to sell our software to anybody," announces Bushnell. "When you look at numbers..." He asks for a pen. "Right now, we serve about six million games per restaurant." McDonalds famously measured their numbers of burgers sold, but Bushnell measures the games.
"We're going to be selling our software, and right now we've got some inquiries on the part of some really interesting people." Those people find the menu ordering system to be an efficient, labor saving device.
"We've got this thing where I get to serve the games," he says, and they don't care about the games, "and I get a little piece of the revenue."
"I believe that, by 2020, that I can...be in 100,000 restaurants," estimates Bushnell. So at six million per year, he continues, figuring on the napkin, "Zero, zero, zero." He pauses, adding. "Zero, zero."
"Six hundred..." Bushnell says, pausing once more to count just how large this number is. His publicist helpfully guesses how the sentence ends, "Million games?"
But the man responsible for the business of interactive entertainment looks up from his napkin. "Six hundred trillion," he says calmly. And as the number sinks in, "That's a lot," he says. "Now what's wrong with that? A 100,000 restaurants?"
http://www.gamedaily.com/articles/features/interview-nolan-bushnells-600-trillion-games/?biz
>>It would be my guess that they would open to the public before then (a soft opening).
This is what Geekdinner seemed to suggest:
>>Ladies & Gentlemen gather round and lend a helpful hand back to the community. uWink is having our LA Geek Dinner beta test their new Hollywood & Highland location.
What’s uWink? uWink is a new restaurant concept by Nolan Bushnell, the man that bestowed upon us Atari & Chuck E Cheese, when we so needed it the most. We’ve tested their Woodland Hills location a number of times and are very excited to try this one.
This will be a pay for your own meal event. Looking for the right sponsor.
June 17th, 8pm
uWink, Hollywood & Highland
Official RSVP on upcoming and for those of you who want to spread the love, rsvp available on facebook too.
http://g33kd1nner.com/?p=18
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=29767567
Ladies & Gentlemen gather round and lend a helpful hand back to the community. uWink is having our LA Geek Dinner beta test their new Hollywood & Highland location.
What’s uWink? uWink is a new restaurant concept by Nolan Bushnell, the man that bestowed upon us Atari & Chuck E Cheese, when we so needed it the most. We’ve tested their Woodland Hills location a number of times and are very excited to try this one.
This will be a pay for your own meal event. Looking for the right sponsor.
June 17th, 8pm
uWink, Hollywood & Highland
Official RSVP on upcoming and for those of you who want to spread the love, rsvp available on facebook too.
http://g33kd1nner.com/?p=18
On May 23, 2008, following receipt of final California Department of Alcoholic Beverage Control approval, the Company closed escrow on the acquisition of certain restaurant equipment and a liquor license (for use at its new restaurant location at 401 Castro Street, Mountain View, California) from Miyake Foods, Inc., the former occupant of the space leased by the Company in Mountain View. The consideration for this asset acquisition was $250,000 in cash. The Company currently estimates that the Mountain View restaurant location will open in late July 2008, although there can be no assurance that factors outside of the Company's control (including, among other things, certain city and landlord approvals) will not cause a delay in the estimated opening timeline.
http://biz.yahoo.com/e/080602/uwki.ob8-k.html
Form 8-K for UWINK, INC.
21-Dec-2007
Entry into a Material Definitive Agreement, Termination of a Material Definitive Agre
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On December 17, 2007, the Company entered into a definitive lease agreement with CIM/H&H Retail, L.P. to open a new restaurant location at the Hollywood & Highland Center in Hollywood, California. In addition, the Company has signed a definitive agreement with H&H Restaurant, LLC to purchase certain assets of the restaurant that had formerly occupied the space to be taken by uWink. This transaction remains subject to the satisfaction of customary closing conditions, including the issuance of a building permit. Assuming prompt closing of the transaction, the new uWink restaurant is expected to open in April 2008.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
On December 4, 2007, the Company terminated its definitive lease agreement with PASSCO Companies, LLC et al., relating to the opening of a new restaurant location at the Promenade at Howard Hughes Center in Los Angeles, California. The termination was as a result of certain permitting delays relating to the Center's conditional use permit that prevented the opening of the restaurant within the timelines provided for in the definitive lease agreement. Moreover, the Company has, at present, determined not to pursue a renegotiation of the terms of this lease because the Company intends to focus on less capital intensive real estate opportunities as it executes on the growth plan for its uWink branded restaurants.
The Company incurred no termination penalties.
http://biz.yahoo.com/e/071221/uwki.ob8-k.html
The review has made it to Seeking Alpha, which will give it much more exposure.
http://seekingalpha.com/article/55261-uwink-inc-food-drinks-and-fun
As a short answer to a previous reply, I just posted the link as I am following uWink, too. I also think there are probably a few mistakes in the article (or let's say things where I have a different opinion, like the "two shares for the price of one" comment).
Still an interesting summary of the business model that might bring some attention to the stock.
Ciao
“Father of Videogames” Nolan Bushnell Joins Game Ad Network Frenzy
Written by Wagner James Au
Saturday, November 24, 2007 at 6:00 AM PT Comments (1)
Nolan BushnellJust weeks after Om brought news of Google’s game-focused advertising initiative, another — albeit much smaller — player is throwing its hat into the ring as well. After a year in beta, Alex Terry, CEO of Mountain View, Calif.-based startup NeoEdge, tells me that their own game advertising network, NeoAds, is officially launching this week.
With such a mismatch of competition, this news might call to mind Verne Troyer attacking Yao Ming with a wiffle bat, but Terry’s brought a secret weapon in the form of his newly appointed board chairman: Nolan Bushnell, who in addition to being the co-founder of Atari, kinda sorta helped launch the entire game industry.
This is not just a vanity appointment, the two men assured me in a conference call; Bushnell will advise game developers in NeoEdge’s network on how to polish their titles for maximum entertainment and stickiness.
NeoAds will largely concentrate on casual games, at least at first, so Bushnell appears to be the ideal veteran for the job since given their simplicity and ease of play, many of the most popular web-based games resemble Atari titles from the 70s.
But how does NeoAds work, and why did Bushnell, who hasn’t been closely involved in the game industry since the 80s, return to the fray? Highlights from my conversation with the two men are below.
Casual Games: Great Potential, Poor Economics
“The casual game space is wonderful but has had bad economics,” Bushnell said.
As both a supporter and watcher of the casual games market, he’s noticed the disjunct between the audience for games and the platforms on which they ran. “When you looked at the console game market, the domestic market got stuck at about 15 million,” he noted. Meanwhile the audience of players in the casual market, primarily defined as simple web-based games, totals some 80 million in the U.S., comprising 34 percent of all American Internet users, according to Parks Research.
Roughly 98 percent of those casual gamers, however, don’t pay to play, Terry noted. “We’re not saying the purchase of games goes away,” he said, but at least an ad network will make that audience monetizable.
neoedge-ad-frame.png DRM Meets ARM
As an open ad network, NeoAds provides digital rights management in an effort to reassure publishers. At the same time, it deals in advertising rights management, creating advertising inventory and distributing revenue to partners based on clicks and impressions via ads embedded in a game’s pre-roll and interstitial.
Terry said the service will be available for downloadable games on the network, opening the possibility that titles for the hardcore gamer market might also work in this space. They already have partnerships with numerous established publishers, and via their site MostFun.com, indie developers can also apply to join.”I like that it mimics to a certain extent the living room and the television,” said Bushnell.
And while impressions are their main focus, Terry told me they’re also seeing impressive clickthrough rates between 2 percent and 6 percent. “One of the things that seems to matter is how tightly the ad frame is integrated into the game,” he said. (See screenshot above.) They also work to partner advertisers with contextually appropriate games — Nestle with the sim game Chocolatier, as a potential example.
Going Up Against Google
As for the prospect of competing with Google’s ad-based network (by far the largest among several other competitors in the ads-for-games space), both Terry and Bushnell sounded positively blasé. “So far AdSense for games seems like regular AdSense,” Terry opined, audibly shrugging. “We’’ll have to see what it looks like.”
When it comes to architecting dynamic ads into games, Bushnell added, “There’s a bigger technical twist, there’s a lot of stuff that goes into it. It sounds simple but it’s really not.
“They’re very good at announcing,” he said of Google, but when it comes to execution, “They’re going to need some help.”
How this space shakes out is anyone’s guess, but Bushnell is excited by the prospect of having an immediate revenue stream for game developers. “When you change the economics and allow easy publishing, you unlock the floodgate to creativity….You have the chance of unintended consequences on the positive side.”
But will Bushnell himself create games running on NeoAds?
“We’ll have some announcements,” the Atari co-founder said, somewhat coyly. For now, he remains careful about dispensing chairman wisdom to developers on the network. “You gotta dance around that,” as he put it. “Everyone’s a prima donna; I give [advice] where it’s welcomed.”
But what developer would hesitate to take design advice from, you know, the father of videogames?
Bushnell chuckled with his distinctive bass rumble, “You’d be surprised.”
http://gigaom.com/2007/11/24/father-of-videogames-joins-latest-ad-driven-game-network/#more-10733
BUY ALERT and New Company Spotlight: uWink Inc. - Food, Drinks and Fun
By Chris Fernandez | November 23rd, 2007 at 2:21 am | No Comments
0
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uWink logoA winning restaurant concept, proven and motivated ownership and management, and a unique niche make me feel confident that uWink can, not only beat the returns of the overall market, but CRUSH the returns of the overall market over a 2-5 year period.
This is the type of stock and opportunity that you look for and hear about at cocktail parties when someone says they bought Microsoft or Apple at $1 per share.
Of course, if things don’t pan out and management fails, this could also be the stock that you hear about at cocktail parties where people moan about their losses on the next great penny stock.
For those who want a more detailed research report, one will be available on PeakStocks.com under the “Research Reports” link in about 2 weeks. What follows is a summary of that research report.
Variables You Should Know:
Risk Rating: 10+ (Highest Possible Risk)
Position Size: 1/4 (as of 10-23-07)
Buy Around Price: $1.80
Note: a purchase of uWink shares should be allocated to the riskiest portion of your portfolio, and only for a small amount of capital at this time. See PeakStocks.com for up-to-the-minute information on uWink.
* Read my posting on large bid/ask spreads and how to protect yourself from getting screwed by the market makers.
uWink header
uWink Inc. (Nasdaq: UWKI.OB)
By Chris Fernandez, PeakStocks.com
I’m hungry and bored, let’s go eat and do something…
Usually this means the traditional dinner and…dancing, a movie, a bar, or other socializing event AFTER eating your food.
Well, what if I told you there was an innovative new restaurant concept that combines these two entities into one at the same time AND does away with the traditional restaurant interface of dealing with a waiter/waitress by allowing you to order your food from the comfort of your table via a touch-screen monitor without any hassles, AND where you can play games with others at your table or at other tables, on that same touch screen game interface?
Oh, and what if I told you that the food was really good, ranging from healthy choices for those who don’t want to break their diets, to more sinful treats for those who do?
Well then my friend, if you really do want to have your cake (literally) and eat it too, welcome to uWink Inc. (Nasdaq: UWKI.OB).
uWink is a brand new restaurant concept headed by CEO Nolan Bushnell the founder and former CEO of Atari and Chuck E. Cheese’s. This was one of the primary factors that intrigued me initially and caused me to look further into this restaurant concept. As we all know, management is probably the #1 factor in a businesses success, and the track record of Mr. Bushnell was certainly high on my list of positives.
In addition, uWink provides delicious modern comfort food made with fresh ingredients ordered via touch screen terminals at the table and served by runners, quickly and accurately.
uWink’s at-the-table-entertainment includes a large variety of games, table-to-table interaction, “edutainment”, videos and more. The dynamic projected interior provides diners with a cool environment, distraction, and adds to the overall ambiance.
Now what if I also told you that the CEO and other insiders have recently purchased a sizable amount of shares in the company and that the CEO’s family and relatives all own stakes in the business due to prior financing activity?
Put it all together and this combination of great management with an outstanding pedigree, good food, good entertainment, and a high margin restaurant concept, attracted me to this investment opportunity.
A New Restaurant Experience
uWink salmonuWink opened their first restaurant in Woodland Hills, CA a little over 1 year ago.
Since that time, they have proven their concept, gotten the kinks ironed out, and have secured funding for the roll-out of 4 more company-owned restaurants, 3 in California, and 1 in Texas, with additional franchise agreements for locations in Florida (3 more locations over a 4 year period), and a 50/50 joint venture in Canada that is expected to begin opening locations in 2008.
The 4 company-owned locations are expected to open in early 2008, with 1 franchised location expected to also open in 2008 in the Miami area.
What’s Inside:
uWink bar
uWink only has one concept restaurant open, but based on the design of this location, they will be building out all of their locations in the same mold.
Namely, having a dynamic look and feel with warm-inviting tones, rich wood finishes and brushed metal accents to juxtapose the technology features.
uWink uses a variety of lighting to deliver a warm glow throughout the restaurant and they expect to be able to adjust the dining atmosphere throughout the day by adjusting the lighting, music, and the computer-driven images that are projected onto the walls.
In fact, uWink had “24” nights where fans of the hit FOX TV show watched the television show projected onto the walls, and during commercial breaks, customers played trivia games relating to the show on the touch-screen monitors at their tables, where the prizes included free dessert and t-shirts.
uWink is trying to cater to a more diverse crowd of clientele, specifically women that have been underserved in the marketplace with the likes of Dave and Busters and other multi-media games and experiences.
Here is another picture of their Woodland Hills location:
uWink Couple
The Games:
uWink’s proprietary technology creates significant barriers to entry, including cost of development, time to market and decades of game play experience.
In addition, while most of the games are free, uWink is adding more pay-for-play games in which customers can win prizes and compete with others that will also create additional revenue and more importantly for us, expand margins because this revenue is virtually 100% profit since most of the technology has been accounted for.
Here are some screenshots of what the terminal and the game choices look like:
uWink games 1
From this menu you can choose a game (there are more), and begin playing. If the game is a pay-for-play game, uWink offers a pre-paid card similar to what Dave and Busters offers, that you simply swipe on the side of the terminals (there are no slots for insertion, its like a key fob) to activate and play these games.
Here’s another shot of a set of different games:
uWink games 2
The Food:
Ok, I’m getting hungry now. Let’s start with a picture of the available food choices at uWink:
uWink food
As you can see, you are pretty much covered regardless of your tastes, mood, or budget.
Not shown above is a full dessert menu, appetizers menu, and under 12 menu for kids.
Here’s what the ordering interface looks for the burgers selection:
uWink Touch Screen Food
You can see how easy it is to order food and I think it’s great to not have to deal with wait staff that can often provide bad service, be overwhelmed with too many patrons, or just bug while you are trying to enjoy your meal.
To me this is a huge drawing feature for a restaurant. To be able to order EXACTLY when you are ready, and know that the order was taken EXACTLY the way you wanted it and that there will be no mistakes is brilliant!
Quick Business Outlook
Now we get to the difficult part.
You see, because uWink has only one restaurant, they really don’t have meaningful revenues to speak of or an established track record, although their Woodland Hills location is expected to generate about $2.5 million in gross revenue this year, and projected by the company to eventually generate about $3.5 million in gross revenue per year.
This makes valuation a difficult if not impossible task, and thus why this stock is extremely risky, and subject to extreme volatility.
In addition, because this stock has a small float, trades for under $5 per share and is traded on the pink sheets, it has large bid/ask spreads, is illiquid, and will fluctuate greatly.
Also, in order to continue to fund operations and open new locations, uWink has had to raise capital, and will most likely continue to have to raise capital through the issuance of new stock, thus diluting current shareholder value.
uWink just completed a follow-on offering where they generated about $9 million dollars in proceeds that should be sufficient for them to open up to 6 locations in 2008 without having to tap the equity markets again until late 2008 or early 2009.
This will give us enough time to gauge whether the concept is taking hold, accelerating and has designs on becoming profitable.
This is also why a purchase of uWink shares should be allocated to the riskiest portion of your portfolio, and only a small amount of capital at this time.
According to the uWink prospectus for their follow-on offering, if they had to, the current and proposed locations could become cash flow positive within 18 months if they did not get the financing that they needed, which they did, but this still bodes well for future openings and current restaurants as they reach maturity.
Let’s Do a Little Number Crunching
Now all that being said, there are a few things that we can look at in terms of sales projections to get a handle on uWink’s valuation, and extrapolate that into the future.
We’ll have to do without any sort of Financials, Margin Trends, Cash-Flow statements, etc., because there are none of any meaningful value at this time.
What we can do is anticipate the future revenue of the company, and look at comparable restaurant chain valuations to get a very ROUGH idea of where uWink stands.
* Let’s start with total store openings: uWink already has one restaurant that has been up and running for about 1 year now in Woodland Hills California. According to the company’s prospectus, they plan on opening 3-6 new locations this year that are company-owned.
They talked about already having certain leaseholder agreements in place for 4 new locations, so let’s keep it there and assume they open 4 new locations in 2008, and have a total of 5 at the end of 2008.
* Revenue per square foot: We can then extrapolate what uWink will be making per square foot for their average restaurant.
In their prospectus, they said they are aiming for about $500-700 per square foot in revenu, with the Woodland Hills Location anticipated to reach about $3.5 million in revenue, or about $650 in revenue per square foot.
In addition, uWink is targeting locations that range anywhere from 6,000 to 10,000 square feet in size. Their newest announced restaurant’s square footage is as follows: one in the Howard Hughes Center in California being 9,700 square feet, their recent opening in Mountain View California being 7,000 square feet, and their Woodland Hills location being approximately 5,300 square feet.
As it stands now, it appears that their average square footage per location is running at about 7,500 or so. We’ll use this value to be conservative.
* Price to Sales (P/S): If we take the above numbers into account, and do some simple math, we get 5 company-owned locations each approximately 7,500 square feet in size.
If we then extrapolate that into annual sales, we get:
7,500 square feet x 5 locations = 37,500 total square feet
37,500 x $600 per square foot in revenue (being conservative) = $22.5 million in gross revenue per year in 2009 (since 2009 will be the first year that all 5 units will be fully operational and providing revenue for a full year’s time.)
Because of the latest follow-on offering and share dilution, uWink’s market cap now stands at about $22 million, which would yield a P/S ratio of about 1.
Depending on the restaurant chain, this can either be high or low.
For slow growers, a multiple of .3-.5 is typical.
For medium growers, a multiple of .75-1.25 is typical. In fact the CEO’s former company, Chuck E. Cheese’s has a ratio of 1.08 on a trailing basis, and that concept is not growing that fast at all.
Faster growing chains command a multiple of 2 or higher with Chipotle Mexican Grill having an astronomical P/S ratio of 4.
The industry average is .74.
So based on this metric alone, and bear in mind this is some ROUGH calculating and extrapolation, it would appear that uWink is somewhat undervalued for 2009 full year numbers, BUT could be significantly undervalued (remember we pay for FUTURE performance, not past) if they open more than these 5 restaurants next year and into 2009.
Also, bear in mind that this calculation didn’t even take into account franchised locations which are all profit with little cost because the revenue is derived from royalties.
* Margins: According to uWink’s prospectus, their current gross margin at their Woodland Hills location is about 70%. They anticipate this rising to anywhere from 73-75% as they leverage their model and increase revenue from their pay-for-play games and outsourced software.
I did some checking and this margin level is incredible right now, without increasing it at all.
For perspective, the industry average gross margin rate is 26.6%.
Now to be fair, this is mostly derived from restaurant chains that don’t have added revenue sources like uWink does in terms of their pay-for-play games and their licensed software products that they will be licensing to 3rd parties and their franchisees.
So to make the comparables a little more fair, I compared their gross margins to Chuck E. Cheese’s (NYSE: CEC), and Dave and Busters who report earnings publicly but are not a publicly traded company, because these restaurant chains more closely mimic uWink’s model of food with games as leverage for higher margins.
Looking at these comparables, uWink still does very well. CEC’s margins clocked in at 57% while Dave and Buster’s margins were an incredible 80% based on 2006 figures.
This leads me to believe that uWink will have no trouble getting to at least 75% gross margins over time, if not more as they leverage all their assets, tighten operating structure, and license and receive more revenue from their games and software both in-store and to 3rd parties.
Why I Invested In the Company
* Top-flight management with large stakes in the company: When a company is this small, that has to be the first place you start. Nolan Bushnell, the CEO has a proven track record for starting fledgling companies (Atari and Chuck E. Cheese’s among many others) that he is fully invested in, and the rest of the management team is seasoned and has a track record.
Specifically uWink’s Chief Restaurant and Development Officer, John Kaufman, and their Director of Restaurant Operations, John Blake, who both have extensive experience with California Pizza Kitchen, with Mr. Kaufman helping CPK grow from a single location in 1986 to over 68 locations before he left the company in 1994.
In addition, according to their prospectus (which might be different now after their recent follow-on offering), the CEO owns about 12% of the company, while all the insiders together own about 25% of the company. That’s great news because it means their interests are aligned with ours.
In addition, when uWink was in financial trouble during the last few years, before they became a restaurant chain and dealt in only software, and before they secured the financing they needed to take the business to the next level, Mr. Bushnell and his family and relatives loaned the company money in differing amounts over various time periods.
Mr. Bushnell, his wife, his son, his brother-in-laws and son-in-law, all loaned money to uWink in exchange for stock in the company. Also, instead of accepting payment for their loans in cash, they all wound up taking stock in the company.
Ordinarily this might look a little shady, but because the stock is worth so little, and these members aren’t being paid back in cash, I like that everyone is in this together and has a stake in what happens to the uWink franchise going forward. Even if they all bailed right now (and no one has yet of course), they won’t be getting much return if any on their initial investments so there is little incentive to cash out.
* Management buying more shares in the company: I can’t even begin to tell you how big this is. When you have an already large stake in the company, as Nolan Bushnell does, to be buying more shares means you have supreme confidence in yourself, your staff and the business itself to get the job done and become a successful entity, and that your stock is too cheap and represents a bargain that is not being properly reflected by this potential.
According to SEC filings, Nolan Bushnell (CEO), Peter Wilkniss (the CFO) and Kevin McLeod (Director) purchased over 130,000 shares in the recent follow-on offering. In other words, they put in more of their own money towards financing the company for the next year.
In addition, a week or so after that, Nolan Bushnell and Peter Wilkniss purchased another 78,226 and 15,888 shares respectively, on the open market at $1.88 per share, right around where the stock is now!
Mr. Bushnell on his own has put in over $200,000.00 in the last couple of weeks into a stock he already had a sizeable stake in! This gets me excited.
* Great Concept: Seeing is believing. uWink’s Woodland Hills concept restaurant has been a roaring success, with increasing revenue every single month since inception.
I believe with the combination of food choices, ambiance and entertainment options, uWink presents a great value proposition for people that don’t want to play games AFTER or BEFORE they eat, but actually DURING their meal!
I mean, heck, walking around Chuck E. Cheese’s and Dave and Busters and playing games is fun and all, but not when you are hungry! I want to be entertained while I eat, not just before and after my meal.
In addition, not having to deal with servers and wait-staff is a huge plus for me. Nothing beats ordering exactly what you want from a convenient touch-screen interface.
* Ground floor opportunity: Hey, you can’t do any better than buying a company that has only one restaurant open at present! I’m always on the lookout for these types of opportunities to fill out my portfolio, and I believe uWink has its place in a well-balanced mix of stocks.
* Multiple revenue streams: How often do you get to invest in a restaurant chain that has multiple revenue streams? Usually it’s food and beverages, and that’s it. Not so with uWink.
Not only does uWink leverage their software and touch-screen technology to save on labor costs, but they also make money via pay-for-play games and are intent on licensing their software and/or game platforms/terminals to their franchisees, and other 3rd parties. Now that’s making the most of your proprietary technology!
* Juicy margins: As discussed above, uWink’s margins are already fantastic and are only going to improve as they add more locations, license more software technology, and improve operations. Only Dave and Busters has higher margins than uWink will in the restaurant business, and if they can succeed with their concept, because it is so unique and protected, they will stay on top of the heap.
* Valuation: Yep, this one is hard to pin down, which is why it’s so low on this list, but it definitely plays a part. With a market cap of only $22 million as of this writing (about $1.80 per share), uWink presents an excellent risk/reward rationale.
Potential Risks
* Never making any money: You gotta start with the basics. uWink has one location, is opening a few more and is losing gobs of money. There is no guarantee that they will EVER make any money at all. There is a reason why this stock is a penny stock and trades for only $1.80 per share, with a market cap of $22 million.
* Operational difficulties: Along those same lines are adjacent risks like not knowing how to best monetize this type of business or business model, the inability of the concept to catch on, the inability to get more money to expand the business etc.
* Inability of the concept to catch on: What if people just don’t like spending $14-18 per person (average ticket) for some bad food, annoying lighting and graphics on the walls, and dumb games that also cost too much money to play and are hard to win?
What if people get bored and don’t come back? Many restaurant concepts are one-hit-wonders and people never come back after their first visit.
It’s possible that uWink’s success is dependent on setting up shop in more affluent parts of the country (California is a good start), and relying on more tech-focused individuals that are open to its technology. Failure to do so could spell failure for the concept.
* Dependence on debt, share dilution to finance the business: This is an easy one…uWink will probably have to tap into the equity markets within 1 year or so, even if their new restaurants do well, because they won’t be generating any cash-flow from operations for at least 1-2 years. This means that you have to be prepared for the shares that you own now to be worth less by next year regardless of the stock price because of the dilution.
We can hope they keep this to a minimum, and I’m sure with their vested interests they will try, but it is inevitable that they will need more cash going forward and there’s only one place to get it assuming they can’t take on any debt from loans or revolving credit arrangements, which is a possibility especially if they show that they are on track for profitability.
Also, with the recent shares that were tendered, uWink also gave the shareholders the right to warrants at $2.40 per share for each share they purchased of the follow-on offering at $2.00 per share. That’s essentially 2 shares for the price of one!
This means that once the stock rises above $2.40 (if it ever does), these shareholders basically got free shares of stock for nothing more than their initial $2.00 per share purchase price of the follow-on offering. Be prepared for more dilution as those shares come onto the market and the stock price rises to make it profitable to do so.
* Penny stock: Let’s not forget one of the most important points before you buy shares in uWink. The shares are very volatile and illiquid and will fluctuate wildly not only from day-to-day, but also within each day’s trading session.
This means you’ll have to contend with large bid/ask spreads, uneven trading volumes and manipulative market makers and traders that can push the price around whenever they want. Buyer beware!
Read my posting on large bid/ask spreads and how to protect yourself from getting screwed by the market makers.
* Other risk factors: Things like options scandals, margin deterioration, losing business, losing customers, increased costs, overall market volatility, etc. Pretty much anything that can go wrong within a business is a risk factor, but the ones listed previously are the main risks to the business, with these being secondary, and possibly primary, risk factors going forward that all businesses need to worry about.
Bottom Line
Companies like uWink present an interesting risk/reward scenario.
There is definitely something here to recommend. With the stock price seeming to be at a low enough level to protect you on the downside, that risk is exacerbated because of its penny-stock status as well as low volume and liquidity.
After accounting for those risks, the business model and fundamentals along with management present a compelling investment thesis that bodes well for a regional-to-national story.
uWink offers great food, affordable prices and a unique table gaming experience that you cannot find anywhere else.
CEO Nolan Bushnell is as seasoned and proven as they come in terms of management, and his interests are aligned with ours proven by his high ownership stake in the company, as well as his outside share purchases within the last several weeks.
When you get that type of confidence, backed up by a proven track record, it bodes well for the company in the near future, as well as the distant future.
A winning restaurant concept, proven and motivated ownership and management, and a unique niche make me feel confident that uWink can not only beat the returns of the overall market, but CRUSH the returns of the overall market over a 2-5 year period.
This is the type of stock and opportunity that you look for and hear about at cocktail parties when someone says they bought Microsoft or Apple at $1 per share.
Of course, if things don’t pan out and management fails, this could also be the stock that you hear about at cocktail parties where people moan about their losses on the next great penny stock.
Buyer beware, but patient and long-term investors with capital waiting for a high risk/high reward stock should dip their toe into the uWink story and hang on.
I’m right there with you, and will of course, continue to monitor the situation and update you with any new information as it becomes available.
Always check PeakStocks.com for the latest information on all the stocks in my portfolio and make sure you never miss a buy or sell recommendation, especially for a stock like uWink.
Hang on for a wild ride!
http://peakstocks.com/buy-alert-and-new-company-spotlight-uwink-inc-food-drinks-and-fun