UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 10, 2006
Commission File Number 001-15977
Tiger Telematics, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-4051167
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification Number)
550 Water Street Suite 937 32202
Jacksonville, FL
(Address of principal executive offices) (Zip Code)
(904) 279-9240
(Registrant's telephone number, including area code)
Item 1.01 (b). Entry into a material definitive agreement.
On March 10, effective as of March 1, 2006, Tiger entered into an agreement
similar to a stipulated foreclosure under USA law, to settle the approximately
$24 million indebtedness discussed in Report on Form 8K dated 1-13-06 with two
entities that are shareholders of the Company who provided an aggregate total of
approximately (pound)12,681,000 to Gizmondo Europe Ltd that went into
liquidation on February 2, 2006, see Report on Form 8K dated 2-3-06. By way of
history, the Company completed on January 9, 2006 an extension agreement on the
combined debts until June 30, 2006. Under the terms of that agreement if Tiger
or any affiliate thereof did not raise or borrow equity and/or debt in an
aggregate amount in the vicinity of $75,000,000 on or before March 31, 2006, all
principal and interest shall be due and payable in full on March 31, 2006. Tiger
guaranteed the prompt payment in full of all amounts outstanding or otherwise
owing by Gizmondo under this Note. In addition, Tiger pledged as collateral the
patents and intellectual property rights of its Smart Adds product and the stock
of its wholly owned subsidiary Smart Adds Inc. to secure the obligations.
Despite continuing efforts, the Company has been unable to consummate such
necessary equity arrangements and as a result deemed the debt as due in full on
March 31, 2006. As a result the Company would have been forced to seek court
protection unless a deal could be achieved.
Under the terms of the just signed debt restructuring agreement, the Company in
essence exchanged the collateral of the Smart Adds IPR, in exchange for a
release of the company's guarantee to pay the entire sum due with accrued
interest of approximately $24 million. The note payable by Gizmondo Europe, Ltd.
was transferred to Gizmondo USA, Inc. another subsidiary of the Company and
eliminates in consolidation accounting.
Regardless of the ultimate sale of the Smart Adds IPR, the Company has no
further obligations as respect to this debt. The Company still retains the
rights to use Smart Adds in any future sales of Gizmondos if the Company is able
to restart the business. The IPR of Smart Adds was valued on the balance sheet
at zero, as the company expenses its software development costs as incurred. The
Company retains all rights to the Gizmondo unit intellectual property rights,
including patents and game rights which are owned by the Company.
Item 1.03 Bankruptcy or receivership.
As reported on Report on Form 8K dated February 3, 2006 the Company's Gizmondo
Europe Ltd. subsidiary was placed into a Court ordered liquidation. The Company
is still discussing with various parties and the UK liquidators, regarding the
possibility of completing the acquisition of certain assets of Gizmondo Europe,
which it has not been able to close. The liquidators may dispose of the assets
shortly, if the Company is unable to complete the transaction.
The Company closed its Texas games studio subsidiary and discontinued the
operation and is satisfying the debts of the entity as required. Gizmondo USA,
Inc.'s subsidiary, National Kiosk LLC closed downs all of its kiosk sales units
in the USA due to the negative impact of liquidation of Gizmondo Europe.
National Kiosk is attempting to settle its obligations without need for court
proceedings.
The Company's lender on its $5M credit facility executed on January 31, 2005 has
not funded the transaction nor is it now expected that they will fund it
although discussion continue. Strategic options for the Company still include
the possible sale of the Company or all or a portion of its assets, the sale of
Gizmondo intellectual property rights, including patents and game rights which
are owned by the Company.
The Company's new business plan may involve licensing the gizmondo unit to
various distributors in exchange for a royalty stream of payments. Discussions
have been started regarding such arrangements but no definitive agreements have
been agreed to and no assurance can be given that it can be achieved. The
Company will report shortly on the restructuring plans as they develop.
Item 5.02(d) RESIGNATION OF A DIRECTOR.
Independent director Chris Wronski resigned from the Company for personal
reasons. He had no stated disagreements with the Company. No director has been
named as of this time to replace him.
Item 8.01 OTHER EVENTS.
On March 6, the US District Court of Southern District of New York granted a
judgment against the Company in favor of Ogilvy on the pleadings as respect to
the breach of contract claim. The action was referred to a magistrate judge for
an inquest to determine the amount of damages to Ogilvy. As to the damages for
breach, the court ordered will" put the plaintiff in the same economic position
(it) would have been in had the defendant fulfilled the contract." The history
was that on August 19, 2005, Ogilvy Group Sweden Limited ("Ogilvy") 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. Gizmondo Europe's relationship with Ogilvy was terminated on June 30,
2005. Pursuant to a Securities Lending Agreement, the Company issued 400,000
shares of its common stock to Ogilvy as collateral for Gizmondo Europe's
obligations to Ogilvy. On October 3, 2005, Ogilvy filed an action against the
Company and Gizmondo Europe in the U. S. District Court, Southern District of
New York, to recover the amounts described above based on alleged defaults under
the Securities Lending Agreement.
With the case determined, the Company is considering appealing the judgment
ruling and will plead to limit its damages since the original 400,000 shares
were issued upon signing the Securities Lending position. Initial pleadings are
due to be filed with the court on May 24, 2006.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 10.1
THIS ASSIGNMENT OF INTELLECTUAL PROPERTY AND RELEASE OF SECURITY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TIGER TELEMATICS, INC.
(Registrant)
/S/ Michael W. Carrender Chief Executive Officer March 15, 2006
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Michael W. Carrender