Seems the people behind the Gizmondo are just a little bit corrupt. I know I'll be keeping my money out of their hands.
http://gamesindustry.biz/news.php?aid=11845Gizmondo financial report reveals huge losses
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Ellie Gibson 09:46 28/09/2005
Questions likely to be raised as report reveals intriguing coincidences
Tiger Telematics has released its delayed financial results in a report which shows giant losses for the company along with some interesting explanations as to where investors' money has gone.
According to the report, Tiger faced net losses of around USD 99 million in 2004, and an operating loss of USD 210 million over the first half of 2005. The company blamed these figures on "Development costs for the Gizmondo and non-cash expenses associated with shares of restricted common stock issued for services."
Tiger was able to secure more funding throughout the period, receiving USD 73.1m in investment capital during the period ending August 2005. An extra 24.7m shares of common stock were issued, earning the company more than USD 200m.
Costs have included a USD 5.9m contract Gizmondo Europe signed with Electronic Arts to develop FIFA and SSX games for the handheld, and the operating costs of the company's global network of offices.
In addition, Gizmondo Europe paid independent developer Games Factory Publishing USD 4 million for coming up with concepts for use with 19 Intellectual Properties including Cheerio's, the New Millennium Encyclopedia, Outlaw Golf, Weather Control and Typing Tutor. The latter IP is a particularly curious addition since the Gizmondo has no keyboard, keypad or touch screen.
Perhaps more intriguingly, Gizmondo Europe also paid independent developer Northern Lights USD 3.5 million to create the games Chicane and Colors. However, these games were in fact developed by two differerent studios - Warthog and Indie Studios, both of which are owned by Gizmondo Europe.
Northern Lights, coincidentally, is owned by Gizmondo Europe director Carl Freer together with Stefan Eriksson, executive officer for Gizmondo Europe.
The coincidences don't end there. During 2004-2005, Tiger hired a consultant who was paid more than USD 170,000 for "Marketing and public relations services, an introduction to the performer Sting, and time spent in connection with the Agaju gaming concept currently in development." The consultant's name? Anneli Freer, aka Mrs Carl Freer.
The report goes on to state that Tamela Sainsbury, the corporate secretary of Gizmondo Europe, was paid nearly USD 150,000 in base compensation during 2004, plus USD 83,000 in bonuses. She was also provided with a "luxury automobile" worth USD 70,000. Tamela Sainsbury lives with her partner, Steve Carroll, who incidentally is a director of the company.
It's clear from the report that Gizmondo executives have a taste for luxury cars - Carroll had a vehicle worth more than USD 230,000 bought for him by the company, while Carl Freer's "automobile allowance" for the year stood at just under USD 280,000. Stefan Eriksson's allowance was a more modest USD 104,000.
Freer, Sainsbury, Carroll and Eriksson each earn at least USD 1.5m a year and have been allocated more than 7.5m shares - worth more than USD 94m.
The report also reveals that some employees have been helping themselves to automobile perks: "In 2004, the company issued 800,000 shares valued at USD 1.8m to Joe Marten for services rendered to the company," it states.
Marten was head of investor relations at the time, but later "Left the employment of Gizmondo Europe after the company's board of directors learned that Mr. Marten had made an unauthorized purchase of a luxury automobile using Gizmondo Europe's funds."
The release of the report could signal troubled times for the company - investors are unlikely to be happy with the stranger revelations, or with the fact that no sales figures for the Gizmondo unit itself have been revealed.
Gizmondo, which recently settled lawsuits with the Jordan F1 racing team and landlords Christian and Timbers, continues to face legal action from an ever-growing list of plaintiffs. PR company Ogilvly claims it is owed USD 4.1m plus interest for services rendered during 2003 and 2004, while Handheld Games is suing over a development contract.
In addition, MTV Networks Europe recently announced that it is "reserving its right to bring legal proceedings for payment of outstanding invoices" after Gizmondo failed to hand over an agreed USD 1.5m by the deadline of March 31, 2005.
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