Tiger Telematics has 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.
News source: GameSpot
