Reading this thread is funnier than a night at the Laugh Factory (especially if Mike Richards is performing).
So I said I wouldn't post for six months but this entire thread has been just too amusing to not say something. It's the battle of bad numbers vs. no numbers.
First things first. Tip - you need to quit when you're behind. You're giving bears a bad name. Every time I think you're about to make a salient point, you make an error so ridiculously egregious that you lose all credibility. You're either careless or just way over your head on your analysis. I do find it odd that in your first post, you tried to come off as some ridiculously inexperienced investor with those basic questions. Then suddenly a few days later, you're posting like you're Seth Klarman. Since you mentioned BWLD, you're clearly associated with The Motley Fool like a few others on this board (me included). Go read some of their info how to value a stock. At the moment, you're giving Fools a bad name.
In terms of MOST of the bulls, your investment thesis seems to not be based on any sort of numerical analysis at all (as opposed to Tip, which is just based on bad analysis), just optimism because the idea is so good and Bushnell is a god of sorts. Rawnoc, I do value the fact that you made trips to the location and were a beta tester type. You're buying what you know, which is a great way to invest. That being said, I just can't get past the financials here.
Speaking of financials, Tip, stop talking about expenditures only in terms of CAP EX. Many of the expenses UWNK would occur in trying to grow (paying corporate overhead, stock options expensing, etc) are NOT CAP EX. Expenditures that are CAP EX will hit earnings as depreciation, either straight line or accelerated, in the years that follow. Given how fast UWNK wants to expand, these depreciation costs will not be insignificant. But that's not the point. The point is that in order to make capital expenditures, or expenditures of any kind for that matter, a company needs MONEY. UWNK has none at the moment. If they sell franchise rights, they will get some. But the real question here is how many do they need to sell how soon and for how much a piece to truly get UWNK off the ground. If they sold 35 for 100K a piece per MOHIT's earlier message, that would be 3.5 million. He also stated 100K in software and equipment fees. I'd be very surprised if 7 million is anywhere near enough to get a national chain off the ground in the way Bushnell seems to want to. That means more money would need to come from somewhere. Dilution I suppose.
I've been there (granted, it was a Tuesday afternoon for lunch) and I thought it was good but not the greatest thing ever. I thought the concept was better in theory than practice. I just didn't get my rocks off on the whole ordering via a computer. My friend and I sat across the table from each other with that big bulky screen in the way. The location of it stifled our conversation. So did playing that basketball game. I will say that our "entertainment Director" was very sweet and answered all of our questions. Clearly, the employees here love the fact that Nolan is giving them options and they were all WAY into providing great service, which is a plus. The trans-fat free menu is a smart way to appeal to LA types too. When we filled out our comment cards for 10% off, we said that UWNK needed to make screens that could be dropped down into the table when food arrived. I understand that others of you disagree with me on the technology and I respect that.
Anyway, the day we went, the Japanese place across the way had a huge lunch crowd. UWNK was almost empty. Of course, the place was only a few weeks old then. Other people who have gone later seem to indicate that it has gotten much more crowded. That being said, I am surprised that their "Grand Opening" still has availability. I mean, sometimes I think you could do a grand opening of a McDonalds here in LA and the thing would still be impossible to get into because of all the C and D list wannabees who are total publicity hounds. Clearly, UWNK isn't attracting that hip, Hollywood crowd at the moment. Then again, it is in the Valley :)
I'm just not buying that franchisees are lining up yet. In that article where Bushnell lost his house, he indicated that he was developing this technology to SELL to resturants. That's a much easier way to make money and less capital intensive than a restaurant chain. If you can create a great technology and start taking it to trade shows, you'll get buyers. What happened to that idea? Is there any possibility that he couldn't find buyers for the technology so he decided to open his own place as a last resort to try to prove that there's a market for it? That seems to be at least somewhat likely given how poorly positioned the balance sheet is here to go national. Jewsforkapler, as one of the few guys on this board who uses financials in his posts, I think you would agree with me that UWNKs current cash position is far from ideal to be starting up a national chain.
If that last resort theory is correct and people don't believe this is the best thing since sliced bread yet (similar to all the dummies who thought Pizza Time would never work), I would think that these big developers UWNK wants to market to will wait to ensure that this concept will fly before they start forking over money. UWNK doesn't have much time for that to happen. When Bushnell founded Pizza Time, he was a wealthy man with deep pockets. Besides that, according to him, people were lining up to give him money due to his Atari success. He's in an entirely different position right now. Clearly, UWNKs history to date (prior to its latest incarnation as a restaurant company) shows that people AREN'T lining up to give him big money anymore or else he would be much better capitalized. Maybe they will line-up if the restaurant takes off, but he doesn't have long to prove the concept because of the awful balance sheet.
I don't think he's going to prove it in time. That's why, unlike Tips, I tried to go short on Monday. 4000 shares at 2.2. That's the real reason for my post.
Unfortunately, E-trade wouldn't let me do it. Said there were no shares available to short. For the record though, let it be known that I tried. See you in six months to see how that trade would have worked out.
Please no posts calling me an idiot. I didn't say anything derogatory about any of you. I just stated my thesis for why I think this company isn't going to work out in its CURRENT form (if it goes bankrupt and someone who is well-capitalized swoops up the intellectual property, that's a different story -- if UWNK had lots of money in the bank, I would never dream of shorting it). Anyway, I tried to put my money where my mouth is and failed.
Oh yeah, one more thing...GO TROJANS!
AI
