Keep it in the family?
Ok, let’s leave that little conundrum there and move on… Let’s have look at some of the other expenses that Gizmondo have forked out for. Now if you’re the director of a big company, of course you should have a flash car, it’s only natural. And it seems as though ‘flash’ has gone up in price by some way since Steve Carroll, a Gizmondo Director, was paid over USD $230,000 to provide him with a “luxury automobile”, Freer is a bit more modest with an “allowance” of just over USD $115,000 for his luxury automobile and poor old Erkisson was given just a paltry USD $104,000 for his car.
Obviously, being in the company is helpful if you want to get paid, but not actually a necessity, as is shown by the fees paid to one Anneli Freer, wife of Carl Freer, for services in 2004 and 2005 that included “marketing and public relations services, an introduction to the performer Sting and time spent in connection with the creation of the "Agaju" gaming concept currently in development”. For that little lot she scooped just over USD $173,000.
But marriage isn’t really necessary either, as Tamela Sainsbury can attest. Sainsbury is listed on the Gizmondo report as “the corporate secretary of Gizmondo Europe” and just happens to be “the co-habiting partner of Steve Carroll, a director of the Company”. In fact, I’ll just quote directly from the report as it saves me the bother and is telling enough in itself; “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. In addition, in 2004 the Company issued Ms. Sainsbury a total of 160,681 shares of the Company's common stock valued at $467,213.”
But it seems that you can push it to far with Gizmondo, as Joe Marten found out to his expense when he bought himself a car with Gizmondo’s money. After it was discovered that Marten’s car was an un-authorized purchase, he left the company, but previous to this, in 2004, he was issued 800,000 shares, valued at roughly USD $1.8 million for services rendered prior to his joining in April 2004. He also benefited from Gizmondo’s 2004 acquisition of Indie Studios, as he was a Director of both at the time of acquisition.
Incidentally, concerning that take-over of Indie Studios, there was a “excess of purchase price over the value of the tangible assets” as the report puts it, which is another way of saying ‘what we paid in excess of what it’s actually, physically worth’. The ‘excess’? Just over a cool USD $3.65 million in EXCESS of the tangible worth of the assets of just USD $61,400… less than the price of the even the cheapest ‘luxury automobile’ Gizmondo paid for but were happy to pay 59 times over the top for. Nice.
That this financial report is going to raise some difficult questions for Gizmondo is certain and the investors are very likely to be the ones doing the questioning. That Gizmondo directors appear to be directly benefiting from inter-company dealings and take-overs whilst already commanding handsome salaries (Freer is on a base minimum of USD $1,922,770 a year, Carroll gets USD $1,542,160 a year and Eriksson the same) should raise some eyebrows as well as the apparent nepotism practised by Freer and Carroll.
Given that the report is missing a key detail, that of just how well the Gizmondo is selling, could be an alarm bell ready to ring. We await developments with interest and we’ll leave the conclusions to you.
You can view the full report here.
