#Ortwinning

Nightrider

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Post from Ortwin Freyermuth CIG - Today at 03:39 pm

Re: UK Tax Rebate Advance for Foundry 42

We have noticed the speculations created by a posting on the website of UK’s Company House with respect to Coutt’s security for our UK Tax Rebate advance, and we would like to provide you with the following insight to help prevent some of the misinformation we have seen.


Our UK companies are entitled to a Government Game tax credit rebate which we earn every month on the Squadron 42 development. These rebates are payable by the UK Government in the fall of the next following year when we file our tax returns. Foundry 42 and its parent company Cloud Imperium Games UK Ltd. have elected to partner with Coutts, a highly regarded, very selective, and specialized UK banking institution, to obtain a regular advance against this rebate, which will allow us to avoid converting unnecessarily other currencies into GBP. We obviously incur a significant part of our expenditures in GBP while our collections are mostly in USD and EUR. 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.


The collateral granted in connection with this discounting loan is absolutely standard and pertains to our UK operation only, which develops Squadron 42. As a careful review of the security will show and contrary to some irresponsible and misleading reports, the collateral specifically excludes “Star Citizen.” The UK Government rebate entitlement, which is audited and certified by our outside auditors on a quarterly basis, is the prime collateral. Per standard procedure in banking, our UK companies of course stand behind the loan and guarantee repayment which, however, given the reliability of the discounted asset (a UK Government payment) is a formality and nothing else. This security does not affect our UK companies’ ownership and control of their assets. Obviously, the UK Government will not default on its rebate obligations which will be used for repayment, and even then the UK companies have ample assets to repay the loan, even in such an eventuality which is of course unthinkable.


This should clarify the matter. Thank you.

https://robertsspaceindustries.com/spectrum/community/SC/forum/1/thread/re-uk-tax-rebate-advance-for-foundry-42/277779
 
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Takeiteasy

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Interest of 0.25% is a very smart way to work and it's a shame things reached this point. However I am glad that I was not quick to believe the clickbait crap and look through the document.

It's just good business.
 

BenjiMac

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Interest of 0.25% is a very smart way to work and it's a shame things reached this point. However I am glad that I was not quick to believe the clickbait crap and look through the document.

It's just good business.
0.25% - That does not sound right. I would wager the floating rate is much, much higher.

I've batted this around with some work bods, the CFO tells me that without knowing details it's hard to really evaluate whether this was a smart move. He's unfamilliar with the project and my explanation almost certainly lacked the business acumen to convey the valuable informatio n needed to advise me.

Essentially, there is two ways to look at it. There COULD be exchange rate and tax liability issues making this a smart move - but he also stresses that also Ortwin's explanation may not hold up. Devil int he detail and all that. The case being that theres a shortage of GBP because it's one of the less received currencies - fair enough - However the loan obviously comes with interest an dneeds to be serviced prior to the receipt of the tax credit its partially secured against. Given the company receives its revenue primarily in USD or EUR - this debt is going to have to be serviced either entirely on UK revnues, which were that feasible the loan would be unrequired, or serviced with funds from elsewhere which means the unfavourable exchange rate is paid ANYWAY.

The second reason that sprang to his mind was one of practicality - that they simply couldn't wait until the credit was paid out.

He stresses it COULD be a very normal and smart move - but equally may not be. It's all context.

Loans to smooth out revenue stream are common, I'm told - but part securing against a future tax credit is riskier because between now and the payment date the UK Government must budget for the year - there is no guarantee this credit will remain at it's current level. Also, a rise in the GBP, possibly due to a softened Brexit arising from the recent election result would increase the relative value of the loan against the dollar.

I'm sorry, but something smells bad.

Finally, reading the documentation for myself, the concering thing is that only the idea of Star Citizen, the IP, is excluded explicitly. So, if things did go south it's for the lawyers to decide if SC can continue because the security of debt against all S42/F42 assets will include game assets, code and other stuff shared by both games. These things would no longer be in the control of RSI/CIG, on paper at least. So, if the debt is not serviced for 60 concurrent days then development on both games ahs to stop it seems. But perhaps some legally minded TESTie would interpret it differently.
 
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Mich Angel

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So let see if I got this...

Photons are particles much smaller than atoms. The more photons a lamp shoots off, the brighter the light. Light is a form of energy that behaves like the waves in water or radio waves. The distance between the top of one wave and the top of the next wave is called a 'wavelength.' Each photon carries a certain amount, or 'quantum', of energy depending on its wavelength.


Black at left is ultraviolet (high frequency); black at right is infrared (low frequency).
A light's color depends on its wavelength. The color violet (the bottom or innermost color of the rainbow) has a wavelength of about 400 nm ("nanometers") which is 0.00004 centimeters or 0.000016 inches. Photons with wavelengths of 10-400 nm are called ultraviolet (or UV) light. Such light cannot be seen by the human eye. On the other end of the spectrum, red light is about 700 nm. Infrared light is about 700 nm to 300,000 nm. Human eyes are not sensitive to infrared light either.

Wavelengths are not always so small. Radio waves have longer wavelengths. The wavelengths for your FM radio can be several meters in length (for example, stations transmitting on 99.5 FM are emitting radio energy with a wavelength of about 3 meters, which is about 10 feet). Each photon has a certain amount of energy related to its wavelength. The shorter the wavelength of a photon, the greater its energy. For example, an ultraviolet photon has more energy than an infrared photon.


Pictorial description of frequency
Wavelength and frequency (the number of times the wave crests per second) are inversely proportional. This means a longer wavelength will have a lower frequency, and vice versa. If the color of the light is infrared(lower in frequency than red light), each photon can heat up what it hits. So, if a strong infrared lamp (a heat lamp) is pointed at a person, that person will feel warm, or even hot, because of the energy stored in the many photons. The surface of the infrared lamp may even get hot enough to burn someone who may touch it. Humans cannot see infrared light, but we can feel the radiation in the form of heat. For example, a person walking by a brick building that has been heated by the sun will feel heat from the building without having to touch it.

The mathematical formulations of quantum mechanics are abstract. A mathematical function, the wavefunction, provides information about the probability amplitude of position, momentum, and other physical properties of a particle. Many of the results of quantum mechanics are not easily visualized in terms of classical mechanics.

On the left, a plastic thermometer is under a bright heat lamp. This infrared radiation warms but does not damage the thermometer. On the right, another plastic thermometer gets hit by a low intensity ultraviolet light. This radiation damages but does not warm the thermometer.
If the color of the light is ultraviolet (higher in frequency than violet light), then each photon has a lot of energy, enough to hurt skin cells and cause a sunburn. In fact, most forms of sunburn are not caused by heat; they are caused by the high energy of the sun's UV rays damaging your skin cells. Even higher frequencies of light (or electromagnetic radiation) can penetrate deeper into the body and cause even more damage. X-rays and gamma rays have so much energy that they can go deep into the human body and kill cells. Humans cannot see or feel ultraviolet light, x-rays or gamma rays. They may only know they have been under such high frequency light when they get a radiation burn. Areas where it is important to kill germs often use ultraviolet lamps to destroy bacteria, fungi, etc. X-rays and gamma rays are sometimes used to kill cancer cells.

Quantum mechanics started when it was discovered that a certain frequency means a certain amount of energy. Energy is proportional to frequency (E ∝ f). The higher the frequency, the more energy a photon has, and the more damage it can do. Quantum mechanics later grew to explain the internal structure of atoms. Quantum mechanics also explains the way that a photon can interfere with itself, and many other things never imagined in classical physics.

Max Planck discovered the relationship between frequency and energy. Nobody before had ever guessed that frequency would be directly proportional to energy (this means that as one of them doubles, the other does, too). If we choose to use what are called natural units, then the number representing the frequency of a photon would also represent its energy. The equation would then be:
E = f
meaning energy equals frequency.

But the way physics grew, there was no natural connection between the units then used to measure energy and the units commonly used to measure time (and therefore frequency). So the formula that Planck worked out to make the numbers all come out right was:
E = h × f
or, energy equals h times frequency. This h is a number called Planck's constant after its discoverer.

Quantum mechanics is based on the knowledge that a photon of a certain frequency means a photon of a certain amount of energy. Besides that relationship, a specific kind of atom can only give off certain frequencies of radiation, so it can also only give off photons that have certain amounts of energy.

The particle in a 1-dimensional well is the most simple example showing that the energy of a particle can only have specific values. The energy is said to be "quantized." The well has zero potential energy inside a range and has infinite potential energy everywhere outside that range. For the 1-dimensional case in the {\displaystyle x}
direction, the time-independent Schrödinger equation can be written as:[5]

{\displaystyle -{\frac {\hbar ^{2}}{2m}}{\frac {d^{2}\psi }{dx^{2}}}=E\psi .}

Using differential equations, we can see that {\displaystyle \psi }
must be

{\displaystyle \psi =Ae^{ikx}+Be^{-ikx}\;\;\;\;\;\;E={\frac {\hbar ^{2}k^{2}}{2m}}}

or

{\displaystyle \psi =C\sin kx+D\cos kx\;}
(by Euler's formula)
The walls of the box mean that the wavefunction must have a special form. The wavefunction of the particle must be zero anytime the walls are infinitely tall. At each wall:

{\displaystyle \psi =0\;\mathrm {at} \;\;x=0,\;x=L}

Consider x = 0

  • sin 0 = 0, cos 0 = 1. To satisfy {\displaystyle \scriptstyle \psi =0\;}
    the cos term has to be removed. Hence D = 0
Now consider: {\displaystyle \scriptstyle \psi =C\sin kx\;}


  • at x = L, {\displaystyle \scriptstyle \psi =C\sin kL=0\;}
  • If C = 0 then {\displaystyle \scriptstyle \psi =0\;}
    for all x. This solution is not useful.
  • therefore sin kL = 0 must be true, giving us
{\displaystyle kL=n\pi \;\;\;\;n=1,2,3,4,5,...\;}

We can see that {\displaystyle n}
must be an integer. This means that the particle can only have special energy values and cannot have the energy values in between. This is an example of energy "quantization."

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Naaa... ha ha ha
That still don't make sense at all...
But it shore looked like I was really smart for a wile right, typing up all that text :nerd:


:stuck_out_tongue_winking_eye: :joy::joy::joy::joy::joy:

CHEERS!
:beer::beer::beer::beer::beer::beer::beer::beer::beer::beer:
:beers::beers::beers::beers::beers::beers::beers::beers::beers::beers::beers:
 

BenjiMac

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CIG's explanation seems pretty reasonable to me.

Why go the expensive route if you don't have to?
If anything, this is a good indicator that CIG is using our money responsibly.
It does sound reasonable, but it is also vague and in at least one place totally inaccurate. This is not a partnership, it is a loan.

It looks like betting the farm on a short term, seemingly high interest bridging loan against a non-guaranteed future payment all to avoid some currency exchange issues - assuming the interest rate of the loan - still in GBP, is cheaper than just converting money into GBP and taking the hit on a bulk transfer rather than taking that hit on incremental payments. Which if I'm honest, I am sceptical about across the lifetime of a loan.

I'm sorry, it doesn't add up somewhere.

The only explanations that make sense are 1)There is a tax liability on top of the exchange rate that really makes a direct cash injection, as was used previously, no longer feasible and an interest incurring loan a better option. 2) The US entity could not secure a credit line itself and nor could the group hold out until the payment date of this future, non-guaranteed tax rebate.

One is not the end of the world, the other could be. The fact that companies house also show that Erin Roberts and others cashed out their shares.. that is alarming to me. If all those Nox dollars are going on salary rises and a precious metal parachute for selected people because the project is about to wind down - we should be furious.

Again, Ortwin could be being totally truthful, perhaps there is nothing to worry about. but his explanation in it's current form is full of more logical holes than a tea strainer. It raises more questions than it allays.
 

NKato

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Apr 25, 2014
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It does sound reasonable, but it is also vague and in at least one place totally inaccurate. This is not a partnership, it is a loan.

It looks like betting the farm on a short term, seemingly high interest bridging loan against a non-guaranteed future payment all to avoid some currency exchange issues - assuming the interest rate of the loan - still in GBP, is cheaper than just converting money into GBP and taking the hit on a bulk transfer rather than taking that hit on incremental payments. Which if I'm honest, I am sceptical about across the lifetime of a loan.

I'm sorry, it doesn't add up somewhere.

The only explanations that make sense are 1)There is a tax liability on top of the exchange rate that really makes a direct cash injection, as was used previously, no longer feasible and an interest incurring loan a better option. 2) The US entity could not secure a credit line itself and nor could the group hold out until the payment date of this future, non-guaranteed tax rebate.

One is not the end of the world, the other could be. The fact that companies house also show that Erin Roberts and others cashed out their shares.. that is alarming to me. If all those Nox dollars are going on salary rises and a precious metal parachute for selected people because the project is about to wind down - we should be furious.

Again, Ortwin could be being totally truthful, perhaps there is nothing to worry about. but his explanation in it's current form is full of more logical holes than a tea strainer. It raises more questions than it allays.
Ortwin runs a law firm. If he was lying here, he would take a hit.

I'm pretty sure he isn't interested in anything that could dent his reputation.

Therefore, his job is to be on the up and up, as well as to protect CIG from liabilities where possible.
 

BenjiMac

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Ortwin runs a law firm. If he was lying here, he would take a hit.

I'm pretty sure he isn't interested in anything that could dent his reputation.

Therefore, his job is to be on the up and up, as well as to protect CIG from liabilities where possible.
I hope so.

Its the vague, open to interpretation language he used in some places that doesn't help.

I mean *technically* he is right - the Star Citizen IP is not at risk as best i can tell. but the assets that make up the game seemingly are - he was keen to step around that one.
 
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BluePilote

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0,25% is interest for a month... annual Tate is 3,0% or prime rate+ 0,3.

It's realy a good strategie, because the minimum exchange rate us 2,0%.
 

BenjiMac

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0,25% is interest for a month... annual Tate is 3,0% or prime rate+ 0,3.

It's realy a good strategie, because the minimum exchange rate us 2,0%.
Do we know the lifetime of the loan?

Assuming the suggested 5 million figure is right then 3% suggests 150,000 GBP interest per year. Thats your cash and mine, I remind. Is the interest listed in the documentation at Companies House?

Given it's a high risk investment (CIGs future revenue potential is ever diminishing. Ship sales will end one way or another and the mjaority of people interested in the game have already bought it) 3% sounds admittedly generous - is this a fixed rate?.

I can find only mention of the base rate, not the final rate - here's a wee linky :- https://s3-eu-west-1.amazonaws.com/document-api-images-prod/docs/JeK61LDzUhssvmOq5UDk1luaUvzM-JtEuUNja5xOVXI/application-pdf?AWSAccessKeyId=ASIAI7HE2UKHN4CPHXKA&Expires=1498737581&Signature=5NX6Z8afhv3DamwEk6Z2u8eD0uw=&x-amz-security-token=FQoDYXdzEG8aDNfSvYNb+0r5ApWubyK3AwuiUlyZ0Dl9SyxYZdLlg5CH4ds+iZEdvmEMVo1C4SzRpkYfyRROQmc1+Vyie14bOgFW8vQsVS1YEXDIOXlqZWRU7cGc0V1QkFY2GKzTZxbCBlM4t/l5U1cg8vLQB1DB2ft/AEN3jIMHFhYYFuV5FfZKaEwcVE7KdUBL3TdjUFwE3fLEhMRixJyUzswhqlbI9fwHTSjQvz72zFbAIFonbiwIwXEzFWsbwdtaTW6k9fDbwvq+fum0FZFWSFf8RVw8Jmfb+S7d9P0xcV4FJvMBu5sFusYiBKHQF0m6HCr1B9SmlzoSvcugl8HwlGDUU7md7ypWeTx04HA70V7xZJii7VcvGr+9ehKCyqzHi2HHY7bKzbz0uqiET33nyIHZsBfDHw4kc/K6NyiZZiIRc+uQeiDOC8DyyZfhx26XyCKc2jyC6Rr3NmW2DLBTz9gYFazz1ad4lsMcKWbHDTzqRpgVvTwpnWNIXNSAY1Fsy1q+1vOavx6iMIOjBiIQaDUio1UUWoSR/mf8PEehzmbnb/nLM6eVCWW71gTNEN8aZVuKsD1VSorAFRZarmoZ00U9oxV3obNqpqWFNbAozLHSygU=

Update:- Incidentally, the accounts for the year seem to show that auditors value F42 at around 3 million. Plus the tax rebate - it does begin to make more sense from the banks point of view I'd have thought.
 
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Mich Angel

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Do we know the lifetime of the loan?

Assuming the suggested 5 million figure is right then 3% suggests 150,000 GBP interest per year. Thats your cash and mine, I remind. Is the interest listed in the documentation at Companies House?

Given it's a high risk investment (CIGs future revenue potential is ever diminishing. Ship sales will end one way or another and the mjaority of people interested in the game have already bought it) 3% sounds admittedly generous - is this a fixed rate?.

I can find only mention of the base rate, not the final rate - here's a wee linky :- https://s3-eu-west-1.amazonaws.com/document-api-images-prod/docs/JeK61LDzUhssvmOq5UDk1luaUvzM-JtEuUNja5xOVXI/application-pdf?AWSAccessKeyId=ASIAI7HE2UKHN4CPHXKA&Expires=1498737581&Signature=5NX6Z8afhv3DamwEk6Z2u8eD0uw=&x-amz-security-token=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

Update:- Incidentally, the accounts for the year seem to show that auditors value F42 at around 3 million. Plus the tax rebate - it does begin to make more sense from the banks point of view I'd have thought.

Realy...!?

I quote my self... ;)

"Don't think to much you create a problem that probably wasn't there in the first place"


you might think a bout that, just saying.. no pun intended ;)

CHEERS! :beers:
 
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