GigaMedia (GIGM) - 2023 Q4 - Annual Report

Revenue Performance - Revenues from MahJong and other casual games were approximately US$1.1 million in 2023, a decrease from US$1.3 million in 2022 and US$1.5 million in 2021[97]. - Revenues generated from the online sports game Tales Runner were approximately US$2.7 million in 2023, down from US$3.4 million in 2022 but up from US$2.4 million in 2021[98]. - Accumulated sales revenues of the mobile role-playing game Yume100 reached approximately US$12.8 million as of December 31, 2023[100]. - Total operating revenues for 2023 were approximately US$4.3 million, a decrease of approximately US$1.3 million year-over-year[148]. - Operating revenues for 2023 were$4,292 thousand, a decrease of 23.2% from $5,585 thousand in 2022[164]. - Revenues from mobile games declined to$400 thousand in 2023 from $800 thousand in 2022, reflecting a broader trend of reduced online engagement post-COVID[165]. - The company collected$4.0 million in cash from customers in 2023, down from $6.5 million in 2022[179]. Financial Performance - The operating loss for 2023 was approximately US$3.2 million, an increase of US$0.1 million compared to the previous year[148]. - Net loss attributable to shareholders was approximately US$3.4 million, an increase of US$0.6 million year-over-year[148]. - GigaMedia's shareholders' equity decreased to US$43.5 million in 2023 from US$48.6 million in 2022[146]. - The company recorded approximately 33,000 active paying users, with an average revenue per paying user (ARPPU) ranging from approximately$40 to $100 for different services[120]. - The company incurred$0.7 million in research and development activities in 2023, down from $1.1 million in 2022 and$1.4 million in 2021[189]. - The net cash used in operating activities for 2023 was approximately $1,193 thousand, a decrease from$2,509 thousand in 2022[179]. - Cash, cash equivalents, and restricted cash at the end of 2023 totaled $38,783 thousand, down from$39,107 thousand at the end of 2022[179]. - The company has zero bank borrowing as of December 31, 2023, and expects to secure lines of credit for operational and strategic needs[176]. Market Strategy and Operations - The company intends to enhance its market position by focusing on mobile and browser-based entertainment services and expects to drive growth through organic means and accretive transactions[92]. - FunTown operates under an item-billing revenue model, allowing users to access basic game functions for free while offering in-game purchases[91]. - FunTown's marketing strategy includes in-game events, online advertising, and offline promotions to attract and retain users[107]. - The company collaborates with leading game development studios to source new online games and localize them for target markets[104]. - The company is transitioning its game portfolio from PC-based formats to browser and mobile platforms to meet changing market demands[190]. Regulatory and Compliance - The company operates under various regulations in Taiwan, including the Protection of Children and Youths Welfare and Rights Act, which governs internet content ratings[127]. - The company has not made any material changes in the accounting methodology used to evaluate investment in securities as of December 31, 2023 and 2022[197]. - The company adopted a written compensation recovery policy on October 30, 2023, in compliance with SEC rules[216]. Shareholder Information - Major shareholders include John-Lee Andre Koo with 2,159,999 shares (19.54%), and James Cheng-Ming Huang with 1,073,566 shares (9.71%) as of March 31, 2024[231]. - The total outstanding shares as of March 31, 2024, were 11,052,235, with 54.44% (6,017,090 shares) not held by major shareholders[234]. - The aggregate cash compensation paid to directors and executive officers for the year ended December 31, 2023, was approximately US$0.5 million[210]. - The company has a total of 4,000 ordinary shares underlying outstanding options granted to directors and executive officers, with an exercise price of$2.90 per share[211]. Employment and Organizational Structure - As of December 31, 2023, the total number of full-time employees decreased to 96 from 101 in 2022, representing a decline of approximately 4.95%[222][224]. - The company has a significant organizational structure with wholly owned subsidiaries operating in Taiwan, Hong Kong, and the British Virgin Islands[140]. - The board of directors currently comprises six members, including one female director and five independent non-executive members[217]. Taxation and Financial Implications - The company is likely classified as a Passive Foreign Investment Company (PFIC) for the taxable year ended December 31, 2023, due to a significant amount of cash and the price of its shares[267]. - If classified as a PFIC, shareholders may face special tax rules on excess distributions and gains realized on the sale of shares, which could result in ordinary income taxation[268]. - The company does not impose taxes on capital gains, but gains on share disposals may be treated as income if connected to trade or business activities in Singapore[255]. - U.S. persons holding shares may be required to file IRS Form 8938 if the aggregate value of specified foreign financial assets exceeds $50,000[278].