Playlogic - OTCBB PLGC breaks above the $1 mark

This is our first write up on Playlogic. They are video game developer with most of their 06 sales coming from a game called "Age of Pirates: Carribean Tales". According to their earnings report, 2006 sales are up almost 200% from the 2005. The company has managed to drum up some impressive distribution partners such as Eidos.

2007 is getting off to a good start so far. The company announced first quarter sales of 3.5 million and an operating profit of 0.8 million .03 per share. This year they are getting some traction on their new titles "infernal" and "Ancient Wars: Sparta". These games are apparently better than there horribly rated main sales driver last year. Here is a peak at their new game "Infernal: which has not yet been rated by Gamespot, but seems to be getting decent feedback from the user community.



Whether or not this is the game that can really take the company to the next level remains to be seen.

There are a few things we don't like about this stock. Losses for the year 2006 were quite heavy. They are deeply in Debt, and are in dire need of additional capital. They recently had to restate earnings because of some accounting issues. The stock is so thinly traded a few thousand dollars can move it up or down very fast. It jumped 35% yesterday on under $5,000 in dollar volume. They have not announced a conclusion to their fundraising efforts. Our opinion on this stock is a firm Don't Buy until we can get a better handle on their fundraising efforts, and until they can get a more favorable rating from Gamespot's brutal editorial team.



(Screenshot from Age of Pirates)

GameSpot slammed "Age of Pirates" with a 4.7 (out of 10) score. Gamespot editors used words to describe the game like Convoluted, Overextended and Buggy. User reviews were mixed, with a common theme being a lot of fancy animation, but not much substance to the gameplay.

You can check out what the game looks like on these videos:





On April 25th the company announced they are trying to complete a much needed 10 million dollar private placement. The pricing of the transaction is $1.15 along with a 5 year warrant for $2.75. The pricing of the deal seemed OK. It puts the pre money valuation on the company of about 30 million which is not too high. But given all of the uncertainty in this business we are not comfortable investing here. We would like this stock better after the placement is complete.

Clearly we do not think that their "convoluted" video game about pirates will take this company to the next level. The future of this company depends greatly on the acceptance of Infernal, Ancient Wars and their upcoming product launches.

For now we are avoiding the stock.




References:

Playlogic Annual Report on file with Securities Exchange Commission

Gamespot's abyssmal review of "Age of Pirates: Carribean Tales"

Gamespot's fair review of "Ancient Wars: Sparta"