Three Platinum Studios employees—including president and chief operating officer Brian Altounian—are selling off more than 21 million shares of their stock in the company, a move financial analysts said could indicate that Platinum is moving closer to insolvency.
According to an S-8 filing registered with the Securities and Exchange Commission in September, Altounian is selling 13.2 million of his 21 million shares; Helene Pretsky, the company's general counsel and executive vice president of business affairs, is selling all of her 8 million shares; and Jill Zimmerman, the company's director, is selling all of her 500,000 shares.
The company has about 232 million shares outstanding, which currently are trading at $0.04 each, down from $0.12 per share in mid-September. The company trades under the symbol PDOS on the Nasdaq Over-the-Counter market.
In a Publishers Weekly Comics Week article in July it was reported that Platinum—which has a business plan of buying and licensing intellectual property—had a $14 million deficit and had been given a "going-concern" warning from its auditor, indicating the company stood a serious risk of going bankrupt. Platinum's financial struggles continued into this year, as through the first half of 2008 it ran a negative balance of more than $1 million, which one analyst said is "a big number for a company of this size."
An analyst who examined the S-8 filing for Publishers Weekly said the deal would provide no financial benefit to Platinum Studios itself because the money from the sale of the shares goes directly to Altounian, Pretsky and Zimmerman.
"The only reason you would do this is for the insiders to sell," the analyst said. "In the end, the insiders get out."
A Platinum spokesman didn't respond to requests for comment.
While analysts stressed that the deal isn't illegal, they said a "legitimate investment bank would not touch" the shares. "A savvy investor would be very wary," one analyst said. "The guy who knows the most about the company wants to sell his stock. How does that make you feel?"
The news on Platinum comes amid the crash of the global economy in fallout from the sub-prime mortgage debacle, but the financial struggles at Platinum Studios are unrelated. According to SEC filings, Platinum had a net loss of $5.2 million in 2007, $4.3 million in 2006 and $2.1 million in 2005. Even though Platinum increased its earnings from $180,500 in 2006 to $1.9 million in 2007, it still lost more than $5 million.
This past summer came news that Platinum had been late on payments to creators. Though the company has been low on cash—at the end of last year it had only about $4,000 on hand—in late July it acquired e-book distributor Wowio for stock, and it recently named Carlos Weiser as the winner of its 2008 Comic Book Challenge, which seeks out upcoming comics creators.
The repeated deficits and a lack of consistent revenue led to Platinum receiving the going-concern warning in its annual 10-K filing. In an exclusive interview with Publishers Weekly in July, Altounian downplayed the warning, though analysts said it means there is serious doubt in the company's ongoing viability.
