Misleading Articles About TTSA Financial Statements
October 16, 2018
We've noticed some reports that we are “in debt” in some astronomical amount. The reports are highly misleading and grossly mischaracterized statements in an SEC filing. It looks like people are misunderstanding the difference between debt and stockholders’ equity. “Debt” is what we owe. The number that is getting the attention is actually the “Stockholders’ equity/deficit” number. That looks like a big number but we don’t “owe” it to anyone and it's not related to the operational results of the company. It just reflects the fact that we’ve been paying our people, like many start-ups, in stock as opposed to paying them in dollars. When we do that, the notional value of the stock awards is based on the amount that we have received from the public for selling our shares. If you want further details, you can look at the footnotes to our financial statements, where the calculation of stock-based compensation is explained in Note 3 under “Stock-Based Compensation."
Below is the statement we sent to Ars Technica in response to their article titled ‘All the dumb things? Blink 182 front man’s UFO project $37 million in debt’ by Eric Berger. They have since updated their article to reflect their mistake and we are appreciative of other outlets who are doing the same.
We were surprised Ars Technica would allow Mr. Berger to post such an article without asking either Mr. DeLonge or To The Stars Academy of Arts and Science for comment. This article is highly misleading and grossly mischaracterizes statements in an SEC filing. Had Mr. Berger bothered to reach out to us for comment this could have been prevented.
Mr. Berger apparently did not read the filing in its entirety, and clearly did not understand the excerpt of the SEC filing he quotes. The approximate $37 million stockholders’ deficit is not debt as he characterized it but is attributable to stock-based compensation expense. It is not related to the operational results of the company. The Consolidated Balance Sheets of To The Stars Academy of Arts and Science in the SEC filing quoted by your author clearly shows the approximately $37 million deficit is attributed to Stockholders’ Equity (Deficit). The filing goes on to explain the mechanism for calculating stock-based compensation and details the various grants of stock options by the company. Mr. Berger’s characterizations of this as debt implies that it stems from traditional borrowings.
Had Mr. Berger bothered to email or call us we could have directed him to these portions of the SEC filing and walked him through it. For Mr. Berger to make the conclusions he did on incomplete research and his own interpretations without contacting Mr. DeLonge or the company is inexcusable.
We request that you print this letter in full within the article as our statement.
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