A high-volume but unprofitable 1988 and 1989, followed by a series of unexpected blows, has left Steve Jackson Games with very severe cash flow problems. In order to increase its chances of survival, the company has cut its staff in half and reduced its new-product schedule drastically. Current plans call for about one product per month. The company's two magazines, Autoduel Quarterly and Roleplayer, will continue on schedule.
1988 and 1989 were growth years, but they were unprofitable for a couple of reasons - mainly management problems. To put it in a very small nutshell, we had a couple of people here who weren't clear on what they were doing. We were spending too much money and selling at too low a discount. The financial officer was also failing to book or report a lot of perfectly legitimate debts.
As a result, we went into 1990 with about $90,000 worth of old debts which we had not known about until Sharleen Lambard physically searched the work area of the ex-financial officer. About $60,000 of these were IRS obligations! During January and February, rigid cash control and big year-end sales helped reduce the debt. But, though the debts were getting smaller, they were also getting older, and we found ourselves on a cash basis with more and more suppliers. In late February of 1990, our cash flow became critically bad.
Our last hope at this point was to release a top-selling product to bring in some desperately-needed cash. This product was to have been GURPS Cyberpunk, set for a March release. But on March 1, our office was raided by the U.S. Secret Service, in conjunction with a data-piracy investigation. All current copies of GURPS Cyberpunk, in both hardcopy and disk form - along with the two office computers the manuscript was on - were taken. The home of the GURPS Cyberpunk writer was also raided, and his own computer taken. Also taken were the data files of playtest comments.
We have since been told that the GURPS Cyberpunk manuscript was not the object of the raids. However, we have been unable to secure the return of the manuscript; the only result of our efforts has been huge legal bills. The Secret Service at first flatly refused to return anything - then agreed to let us copy files, but when we got to their office, restricted us to one set of out-of-date files - then agreed to make copies for us, but said ''maybe tomorrow'' every day from March 4 to March 26. On March 26 we received a set of 9 disks which purported to be our files, but the material was late, incomplete and well-nigh useless.
Many parts of GURPS Cyberpunk had to be virtually re-written, but the book was eventually released, more than a month late.
At this writing (early June), our hardware and software have still not been returned. The US Attorney continues to tell us that we will get it back "soon."
In the aftermath of the raid, it became clear that our inability to ship GURPS Cyberpunk on time would cripple cash flow so badly as to threaten the company's future. On March 9, after an emergency meeting with our CPA firm, we made some very painful decisions. Eight people, out of a staff of 17, were let go, effective immediately. The production schedule was cut back radically.
To answer some of the obvious questions at this point:
That's about it. Thanks for your help and support. We're going to do everything we can to pull through this and keep on making good games. "That which does not kill you makes you stronger" - so cross your fingers.