NFTs may get the first stock market debut with a little known company, Ultimax Digital Inc., wanting to raise $11 million by offering 2.5 million shares at a price range of $4 to $5, giving it a market cap of $83 million.
They had no revenue for either 2020 or 2021, but they have two games. One called Geminose – Animal Popstars, which they describe as “a delightful kids game for the Nintendo Switch,” and another called StoneHold, a Free to Play (F2P), multiplayer (two teams of up to five players each), fantasy game in the genre known as a Multiplayer Online Battle Arena (MOBA).
They launched in 2018, raising $2 million, now pivoting to operating an NFT marketplace, and providing infrastructure for video game developers to incorporate NFTs into video games.
They call it the Ultimax NFT Marketplace, which has not yet launched as far as we can see, and they see a problem with the current Sotheby-type auctions for NFTs.
“We believe that strategy will produce hit or miss results, leaning heavily towards miss and making it hard to both predict and sustain revenue.
Instead, we are focused on introducing digital collectibles to a wider audience, in a way that is reminiscent of the way concert tickets are sold.”
Their strategy to gain any traction with NFTs is two folds, the project says. Their own games and licensed content.
“Our own games – Geminose and StoneHold – will be rich sources of digital content for the Ultimax NFT Marketplace. This will be especially true of StoneHold.
As the popularity of both games increase, we plan to create digital trading cards for the game characters to be offered on the Ultimax NFT Marketplace.
Equally as important, using our proprietary content will allow us to develop case studies to share with other video game developers.”
In addition for licensing “the initial focus is on well known pop culture content which would fit our NFT trading card model for the Ultimax NFT Marketplace.”
They have no full time employees, but retain “approximately” seven consultants, software developers and engineers.
Their operating expenses are about $1 million a year, and have a $2.7 million deficit, both due to debt and presumably to pay off the seed.
Making this all pretty much as Hail Mary as you get from an investment perspective, and they’re pretty upfront about it, stating “management and our auditors have concluded that our historical recurring losses from operations and unstable cash flows from operations raise substantial doubt about our ability to continue as a going concern.”
The StoneHold game however looks the part and if they do raise what effectively would be $8 million in cash, they’d be able to keep running for some time and who knows, their NFT trading cards might work.
This is in a very regulated environment, however, so no token airdrop to create a community around the game.
The Securities and Exchanges Commission (SEC) has been unwilling to modify any of its requirements designed for paper systems where digital tokens as such with pseudo-anonymous owners did not exist.
The token model therefore simply can not operate in this regulated environment, limiting this project to simply in-game items, but as NFTs.
That can potentially work if the game is very attractive and competitive in a freemium model of sorts, with the NFT nature of the in-game items allowing for secondary markets if SEC isn’t in a grumpy mood.
Nonetheless, if this Initial Public Offering (IPO) does go ahead, it would be the first highly speculative startup to tap into stock based capital markets to experiment with in-game NFTs.