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Left Behind Games Inc. (OTC Bulletin Board: LFBG), a leading publisher of Christian video games, and Digital Praise, the world's largest privately held company producing Christian video games, today announced they have entered into a merger agreement. The new entity will possess the synergy of two experienced development teams, their combined highly successful video games, and the increased financial resources available through a public company. All of these factors are expected to significantly raise the visibility and appeal of the Christian video game market.
HanClinto of ChristianDevs.com wrote this astute assessment:
The biggest question that I've been asking myself has been... "What's in this for Digital Praise?" I mean, like Mene said -- they've got a good name, a good development team, a solid distribution channel, and even good access to manufacturers. What could Left Behind give them? Left Behind has a tarnished name, gobs of debt, no development team -- the only thing that they have to offer Digital Praise is a distribution channel (which they already have) and the fact that they're on the stock exchange.
And then it sunk in a bit more, and I realized how valuable that was. They're on the stock exchange.
Digital Praise has always been hampered by lack of access to capital. They've always struggled financially (I believe the owners mortgaged their own houses at least once -- maybe more) in order to fund the business. They've always been very up front about it to their investors, but it's not made their job any easier.
If you look at the history of Left Behind, who were they originally? Well, there was this other company that had publicly traded penny stock called Bonanza Gold that had gobs of debt and severe financial issues. Left Behind wanted to get on a stock exchange, and one of the easier ways to get on a stock exchange is to buy up a company that's already on the stock exchange, assume its debt, and change its name. That's exactly what Left Behind did, and it really shortcutted a lot of the hassle that it is to get a new company to be traded.
My theory is that, in essence, Left Behind is Digital Praise's "Bonanza Gold". Meaning, while Left Behind has relatively few tangibles to offer Digital Praise that DP doesn't already have, this will let LBG / DP quickly raise capital through issuing stock. Sure, it dilutes the value of the company -- but that dilution happens any time you raise venture capital. This is just a really really easy way to do it, and it's incredibly liquid. Need $350k to pay for some consulting? Issue some stock -- that's what Left Behind did last December. Need to pay for manufacturing costs of your game? Digital Praise won't have to go through the hassle of individual bank loans or mortgaging their personal houses to pay for this stuff anymore -- they can just issue stock, and move on with the next thing. Especially with how reticent banks have been to loan money to corporations (particularly corporations with weak financials like Digital Praise) since the last economic meltdown, I can really see how such a thing is really really valuable in this recession.
Combined with Digital Praise's development team / resources / skills, I think that having ready access to such capital has potential to fund some really cool and original projects out of them.
Funnily enough, I go through all of that to arrive at this conclusion, yet this is exactly what Tom Bean of Digital Praise originally said in the press release:
"This merger gives us access to capital that we anticipate will enable us to produce far more new innovative games than we could hope to develop as a privately held company,"
I frankly just didn't believe him at first. I was casting around, searching around for ulterior motives -- but the more I think about it, I think that they're being completely honest, and that the stock exchange alone is enough of a reason for Digital Praise to want to make this move.
As Bugala / PFC said, the fact that LBG has some positive recognition and community around them, as well as some more developer contacts is of course a nice bonus, and better than if they had just merged with any random secular publicly traded company. Troy is familiar with all of the filings and the requirements of a public company, and Digital Praise gets all of that "publicly traded know-how" in Troy. They're two glowing coals that are struggling to stay warm, and they've lumped themselves together.
I was very skeptical of this at first, but I'm really warming up to the idea that this could be a good thing.
In the end the DP and LFBG names will still remain, with the 'higher ups' given specific roles in each company, employment guarantees (3 years), salaries (Beans and Fokos get $120,000 each, a $30,000 signing bonus, an undisclosed 'good boy' performance bonus and Troy gets $200,000 and a maximum 'good boy' performance bonus of $250,000) and stock options (Beans and Fokos get 3.08%).
Interesting notes on DP sales:
+) Digital Praise has sold over 150,000 dance game products, 85,000 guitar game products, and released over 35 products in five years. Digital Praise holds the distinction of having generated more than $5.6 million in revenue through sales of its Christian games during the past three years.
Personally, I would be wary of being involved with LBG for reasons I won't repeat...but if you're interested here's the rest of the press release:
Digital Praise is a developer, publisher and distributor of well-known games such as Adventures in Odyssey®, Guitar Praise™, Dance Praise® (including VeggieTales® edition), Light Rangers, as well as Hermie & Friends™, aMazing Bible and two new iPhone game apps. Established in 2003 under the management of Tom Bean, Peter Fokos, and Bill Bean, Digital Praise now has a catalog of over 30 award-winning titles for Windows and Mac personal computers, DVDs, online flash games, and iPhones. To learn more about Digital Praise's award-winning Christian entertainment products, go to www.digitalpraise.com.
Digital Praise realized its first big hit in 2005 with Dance Praise, a game integrating a dance mat and music from top Christian artists. Its biggest hit, Guitar Praise, was released in late 2008. The game utilizes a unique wireless guitar that lets players jam with popular Christian musicians.
Digital Praise has established a wide range of strategic relationships with Christian market leaders including Thomas Nelson, EMI, and Focus on the Family (which has both U.S. and international distribution partners), plus Christian retailers such as Family Christian Stores, Lifeway, Parable and Mardel. General market retailers handling Digital Praise products include Apple, Best Buy and Fry's Electronics. Online retailers include Amazon.com and Christian Book Distributors (CBD), and international partners include Cook in Canada, STL in Great Britain, and Koorongs and Word in Australia.
"Digital Praise has the four key ingredients that will take our company to the next level," said Left Behind Games CEO Troy Lyndon. "Those keys are: (1) strong brands and products, (2) multi-channeled distribution, (3) a solid management team and (4) a history of generating millions of dollars in the emerging Christian video game market, a feat no company has matched."
"This merger gives us access to capital that we anticipate will enable us to produce far more new innovative games than we could hope to develop as a privately held company," said Tom Bean, President and CEO of Digital Praise.
Michael Patcher, Research Analyst at Wedbush Securities stated, "I think that the Christian video game market is a significant market currently underserved by traditional publishers. This merger will allow Left Behind Games to be well positioned to serve the millions of people of faith that enjoy Christian entertainment."
The Christian entertainment market is well demonstrated in various popular types of media. According to the Gospel Music Association Industry Overview in 2009, Christian/Gospel recorded music sales are almost half a billion annually with over 56 million units sold in 2008.
CEO Troy Lyndon adds, "We believe every child and gamers of all ages should have the opportunity to play Christian games. We are grateful to our investors who believe in our mission and purpose; and who have made this merger possible."
About Digital Praise Inc.
Digital Praise is an independent developer of family-friendly Christian entertainment software for personal computers and other devices including iPhones. The company produces, publishes and distributes titles for families who enjoy interactive entertainment software with principled character-building themes and "just good clean fun." For more information, visit www.digitalpraise.com.
About Left Behind Games Inc.
Left Behind Games Inc., also known as Inspired Media Entertainment (See www.inspiredmedia.com), has become one of the world's leading independent developers and publishers of quality interactive entertainment products that perpetuate positive values and appeal to mainstream and faith-based audiences. For more information, visit www.leftbehindgames.com.
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