GigaMedia (US:GIGM)2023-04-27 16:00Revenue Performance - FunTown generated approximately US$1.3 million in revenue from MahJong and other casual games in 2022, a decrease from US$1.5 million in 2021 and US$1.8 million in 2020[96]. - Revenue from the online sports game Tales Runner increased to approximately US$3.4 million in 2022, up from US$2.4 million in 2021 and US$2.7 million in 2020, attributed to revitalization efforts during the COVID-19 pandemic[97]. - The accumulated sales revenue of the mobile role-playing game Yume100 reached approximately US$12.4 million since its launch in September 2015[99]. - Total operating revenues for 2022 were approximately US$5.6 million, an increase of approximately US$0.1 million year-over-year[142]. - Operating revenues for 2022 were $5,585 thousand, representing a 1.7% increase from 2021[159]. - Digital entertainment service revenues decreased from $1.5 million in 2021 to $0.8 million in 2022, while revenues from a licensed sports game increased by 42.9% to $3.4 million[160]. Expenses and Losses - Total costs and expenses decreased by approximately US$0.9 million year-over-year to US$8.6 million, primarily due to improved gross margin and controlled expenditures[142]. - The operating loss for 2022 was approximately US$3.0 million, a decrease of approximately US$1.0 million compared to the previous year[142]. - Net loss attributable to shareholders was approximately US$2.8 million in 2022, a decrease of US$0.4 million year-over-year[142]. - Gross profit for 2022 was $3,250 thousand, with a gross profit margin of 58.2%, up from 52.9% in 2021[161]. - Total operating expenses decreased by 8.9% to $6,271 thousand in 2022, primarily due to cost control measures[163]. - Product development and engineering expenses were $1,110 thousand in 2022, a reduction of 23.4% from 2021[163]. - Selling and marketing expenses decreased by 4.9% to $1,644 thousand in 2022, influenced by currency exchange rates[166]. - General and administrative expenses were $3,515 thousand in 2022, slightly down from $3,697 thousand in 2021[167]. Customer and Market Engagement - As of December 31, 2022, the company had approximately 9.0 million unique registered customers, with around 43,000 active paying users during the year[119]. - FunTown's marketing strategy includes in-game events and online promotions to increase user engagement and attract new players[108]. - FunTown operates under an item-billing revenue model, allowing users to access basic game functions for free while offering in-game purchases for enhanced experiences[91]. - The company plans to expand its mobile and browser-based game offerings to strengthen its market position in the digital entertainment industry[92]. - FunTown's digital entertainment services are primarily focused on the high-growth mobile and browser-based casual games market in Asia[89]. Competition and Market Landscape - The company faces competition from both online game operators and offline entertainment products, with major competitors including Soft-World and IGS[120][121]. - The competitive landscape includes online game operators in Taiwan and Hong Kong, with low barriers to entry for new competitors[143]. - The company anticipates increased competition in the digital entertainment market due to low entry barriers and the introduction of new products[121]. Financial Position and Assets - Total current assets as of December 31, 2022, were US$47.8 million, compared to US$42.6 million in 2021[140]. - Total assets decreased to US$52.1 million in 2022 from US$55.5 million in 2021[140]. - Total current liabilities were US$2.6 million in 2022, down from US$3.2 million in 2021[140]. - GigaMedia's shareholders' equity was US$48.6 million as of December 31, 2022, compared to US$50.9 million in 2021[140]. - Cash and cash equivalents at the end of 2022 were $39.107 million, down from $41.761 million at the end of 2021, reflecting a net decrease of $2.654 million[173]. Research and Development - The company invested over US$1.1 million in 2022 to enhance its in-house development capabilities for casual games[101]. - The company incurred $1.1 million in research and development expenses in 2022, down from $1.4 million in 2021 and $1.3 million in 2020[181]. - The company plans to primarily invest in software and computer hardware equipment in 2023 to support growth initiatives in its digital entertainment service business[179]. Governance and Compliance - The company has a standing audit committee and compensation committee, with all directors attending meetings held by each committee[209]. - The audit committee met five times during fiscal 2022, focusing on auditing, accounting, and risk management matters[210]. - The compensation committee met two times during fiscal 2022, evaluating executive compensation and performance[211]. - The company has adopted a code of ethics applicable to key executives and directors, with full text available on its website[284]. - An anti-fraud policy was adopted on December 19, 2005, and amended on February 13, 2009, to prevent fraud schemes[285]. Shareholder Information - As of March 31, 2023, major shareholders include John-Lee Andre Koo with 2,159,999 shares (19.54%), James Cheng-Ming Huang with 1,073,566 shares (9.71%), and Jonathan Honig with 1,105,145 shares (9.99%) of the total 11,052,235 shares outstanding[220]. - The total number of full-time employees decreased from 135 in 2020 to 101 in 2022, with a notable reduction in the Development function from 48 to 27[213][214]. - The company has not declared or paid any dividends and plans to retain earnings for business operations in the foreseeable future[227]. Risk Management - The company is subject to various market risks, including changes in interest rates and foreign currency exchange rates, which may impact its financial performance[269]. - The company has not used hedging transactions to reduce exposure to exchange rate fluctuations but may consider doing so in the future[270]. - The company maintains the bulk of its financial assets in U.S. dollar-denominated assets to limit foreign currency risk exposure[273]. Internal Controls - Management assessed the effectiveness of the internal control over financial reporting as of December 31, 2022, concluding it was effective[279]. - There were no changes in internal control over financial reporting during the year ended December 31, 2022, that materially affected its effectiveness[282]. - The company is a non-accelerated filer exempt from section 404(b) of the Sarbanes-Oxley Act, thus no attestation report from the registered public accounting firm is included[281].