Business Context and Reporting Period
This Form 8-K, filed on August 21, 2015, reports the consummation of a reverse merger by Steampunk Wizards, Inc. (formerly Freedom Petroleum, Inc.). The Company completed a Share Exchange with Steampunk Wizards Ltd. ("Malta Co."), a Maltese game development firm, on August 21, 2015. Malta Co. is now a wholly-owned subsidiary, and its former shareholders own approximately 55% of the combined entity. The Company has abandoned its previous oil and gas exploration business to pursue Malta Co.'s mobile game development operations, specifically the "Bungee Mummy" franchise.
Key Financial Metrics
The filing provides financial data for Malta Co. from its inception (October 27, 2014) through March 31, 2015. The Company is pre-revenue.
| Metric | Value (EUR) |
|---|---|
| Revenue | $0 |
| Net Loss (Inception to Mar 31, 2015) | $(349,661) |
| Cash Balance (as of Mar 31, 2015) | $2,311 |
| Total Assets (as of Mar 31, 2015) | $20,732 |
| Total Liabilities (as of Mar 31, 2015) | $53,393 |
| Working Capital Deficiency | $(35,651) |
| Cash Used in Operating Activities | $(100,241) |
Stockholders' Equity (Deficit) as of March 31, 2015, was $(32,661). The Company has received a "going concern" opinion from its auditor due to reliance on equity sales and loans for funding.
Material Changes
- Change of Control: The Share Exchange resulted in a change of control. Former Malta Co. shareholders now hold 55% of the combined company's outstanding common stock.
- Business Pivot: The Company transitioned from an oil and gas exploration entity with nominal operations to a mobile game developer.
- Accounting Treatment: The transaction is accounted for as a reverse merger. Malta Co. is deemed the accounting acquirer; therefore, historical financial statements reflect Malta Co.'s operations.
- Capital Structure: The Company issued 4,812,209 new shares to Malta Co. shareholders, and the CEO transferred 10,096,229 existing shares to them. Total outstanding shares increased to approximately 27.15 million.
Guidance, Outlook, and Risks
Outlook and Operations: The Company plans to launch "Bungee Mummy: Challenges" (a casual game) and "Bungee Mummy: Kings Escape" (an adventure-puzzler) on mobile and PC platforms. Management anticipates launching the first paid world and casual game in early Q3 2015. Future plans include developing two additional major franchises.
Liquidity and Capital Needs: The Company explicitly states it does not have sufficient funds to operate for the next 12 months. It must raise $100,000 by November 2015 to continue operations. Failure to raise capital could force a reduction or discontinuation of operations.
Risk Factors:
- Early Stage Risks: The Company has a short operating history and no revenue to date.
- Market Competition: The mobile gaming industry is highly competitive with low barriers to entry.
- Platform Dependency: Revenue relies on third-party platforms (Apple App Store, Google Play) which can change policies or terms unilaterally.
- Intellectual Property: Risks of infringement claims or inability to secure necessary licenses.
- Stock Liquidity: The stock is classified as a "penny stock" (trading under $5.00), subject to SEC Rule 15g-9, which may limit liquidity and trading activity.
Investor Verification Checklist
- Capital Sufficiency: Verify if the Company has secured the required $100,000 funding by November 2015 to avoid operational cessation.
- Product Launch Status: Confirm the actual launch dates and download metrics for "Bungee Mummy" titles, as delays could impact revenue projections.
- Revenue Generation: Monitor the transition from pre-revenue to actual monetization via in-app purchases and advertising.
- Related Party Transactions: Review the terms of the management agreement with IceVista BVBA (CEO's entity) and the asset purchase from Ventus Investment Holding Ltd.
- Stock Liquidity: Assess the impact of "penny stock" regulations on the ability to sell shares in the secondary market.