Gizmondo Financial Results Show Gigantic Losses
Tiger Telematics Inc, the Florida-based parent company of the Gizmondo handheld gaming system, and a consistent source of interest for its unusual business tactics, which...
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Tiger Telematics Inc, the Florida-based parent company of the Gizmondo handheld gaming system, and a consistent source of interest for its unusual business tactics, which have included the acquisition of a agency for fashion models and the purchase of a racehorse, has released its delayed financial results up to the end of 2004, with startling results. Although only officially filed through December 2004, and showing net losses of approximately $99 million for 2004 alone, the company's SEC documents also show an operating loss in the first six months of 2005 of more than $210 million. According to Tiger, this gigantic figure is "principally due to development costs for the Gizmondo and non-cash expenses associated with shares of restricted common stock issued for services." The rest of the document shows some of the reasons for this loss; a contract with Electronic Arts in which Gizmondo Europe paid Electronic Arts $5.9 million for the development of FIFA Soccer and SSX 3 for the handheld, a total of seven offices housing 131 employees and contract agents, including development and production offices in Florida, Texas, California, and the UK; and continued expenses, apparently without profit-making sales for the Gizmondo console, which launched in Europe earlier this year. Lawsuits also continue to mount for the company - as well as settled suits from the Jordan F1 racing team and former landlords Christian and Timbers UK Ltd, there is a current suit from Handheld Games over a game development contract, and a new suit from PR firm Ogilvy, which commenced an action against Gizmondo Europe Limited in the Stockholm District Court to collect approximately $4.1 million plus interest allegedly owed to Ogilvy for marketing and advertising services provided to Gizmondo Europe during 2003 and 2004. In addition, as of September 2, MTV Networks Europe has demanded payment of $1,527,500 previously invoiced to Gizmondo Europe under an agreement dated March 31, 2005 with Gizmondo Europe, presumably for advertising purposes, and is "reserving its right to bring legal proceedings for payment of the outstanding invoices." Nonetheless, Tiger continues to get funding and give out redeemable shares - through August 23, 2005, the company issued approximately 24.7 million additional shares of common stock in numerous private transactions aggregating over $200 million, but has received equity capital from investors of $73,100,000 through the same date, allowing it to continue trading. Notable perks to employees were also revealed by the filing - CTO Steve Carroll had a luxury automobile with a value of approximately $231,324 purchased for him by the company, Carl J Freer had 'other compensation' of $279,516 for the year, including an automobile allowance of $115,662, and Bo Stefan Eriksson, director of Gizmondo Europe, had a mere $104,095 in car allowance for the year. All four of these executive had a financial agreement with at least a base salary of $1,500,000, impressive for a company so early in its existence, as well as a total allocation of 7,641,874 shares, worth over $94 million at current share prices. Fortunately, family members are also included in Gizmondo's business plan, albeit as valued employees with connections to famous rock stars, as explained: "In 2004 and the first quarter of 2005, Gizmondo Europe paid Anneli Freer, the spouse of Mr. Carl Freer, $116,000 and $57,831, respectively, for consultancy services provided to Gizmondo Europe. Mrs. Freer provided marketing and public relations services, an introduction to the performer Sting [who played at Gizmondo's European launch] and time spent in connection with the creation of the "Agaju" gaming concept currently in development... Tamela Sainsbury, the corporate secretary of Gizmondo Europe, is the co-habiting partner of Steve Carroll, a director of the Company. In 2004, Gizmondo Europe paid Ms. Sainsbury $149,844 in base compensation, other compensation and bonuses of $82,954 and provided her with a luxury automobile valued at $69,108 at the time of acquisition." Thoughout this, Gizmondo still found time to acquire Globicom, Inc, a Texas-based corporation, to "provide wireless network support and expand the wireless infrastructure for Gizmondo." Gizmondo paid $200,000 in cash and issued 116,859 shares of its restricted common stock on September 8, 2005. Also apparent in the contract: a new agreement with UK-based Game Factory to provide 19 new games for the Gizmondo console, which is launching in limited form in the U.S. this holiday season, according to the company's last information on the matter, with an expanded widescreen version due in early 2006. [UPDATE: 07/29/05 9.16am - Carl J Freer's 'other compensation' is actually $279,516 for the year, including an automobile allowance of $115,662, and is not entirely composed of automobile allowance, as previously reported.] [UPDATE: 02/21/07 4.00pm - References to Joe Marten removed due to legal complaint.]
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