More woes for Gizmondo
Parent company Tiger gets an extension on shareholder loans as coffers run dry, bemoans "severe financial pressures."
The creditors are starting to come knocking on Tiger Telematics' door, but the Gizmondo maker's not quite ready for them, according to its latest filing with the Securities and Exchange Commission.
In the filing, Tiger admitted that its "Gizmondo Europe subsidiary has experienced severe financial pressures from various vendors as its cash flow has been unable to service the requirements. This has in part been aggravated by a lack of investor funding. The company has been actively negotiating for further funds from debt and equity sources to assist the cash flow needs of Gizmondo Europe but there can be no assurances that this will be achieved."
Now the company is attempting to secure a short-term loan of $5 million to keep it going until it can secure a planned $75 million in refinancing and further debt. That chunk of change will be used to pay off the short-term loan, as well as $21 million in loans to its shareholders that are already overdue. However, in order to get the extension on those loans, the company had to put up as collateral the intellectual property rights and patents of its Smart Adds service, which forces Gizmondo users to view a set number of ads each day in order to play games on the handheld.
The filing also mentions the settlement of a lawsuit brought against the company by HandHeld Games, developer of the Gizmondo street racing game Chicane. According to the filing, HandHeld had sued the company for more than $200,000 in damages and costs, and then upped its claim to more than $900,000. The settlement was reached for the sum of $175,000.
This is just the latest in a series of setbacks for Tiger. After delaying the US launch of the device several times, the company quietly launched it in a handful of mall-based kiosks around the country and through its Web site. It also had a handful of its executives connected to organized crime in Europe, and most recently, it failed to follow through on its promise to unveil a widescreen Gizmondo at CES 2006, with no reason given for the no-show.
As of press time, Tiger stock was trading at $1.65, down almost 20 percent from its $2.05 opening price.
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