GetFugu (OTC: GFGU) is a catastrophe of a company brought to you by the same team which gave us the infamous Gizmondo disaster, involving the Swedish mafia and smashed Ferraris which I repeatedly blogged about a few years ago. GetFugu is ostensibly a mobile search company of sorts, often using the term Augmented Reality in order to seem even more cool, but it's really a fascinating study of how these types of companies operate, which is just under the radar.
There has been a series of amusing moments since the company emerged - you just can't make this stuff up, and this is just from reading public press releases:
- Company goes public through a reverse merger in March, 2009 - has almost 200M shares, briefly giving it a market cap of $600M at $3.20 a share. Stock is now $.13/share, a 95% drop.
- Company repeatedly has to amend its press releases the next day, with Blackberry, with Google, and with its own marketing news
- Sept 09 - Spongetech, a maker of high tech sponges (yes, sponges), announces a business development deal with GetFugu as well as a $4M investment into the company - everyone must see the synergy between sponges and mobile search, right? Unfortunately, 3 weeks later, Spongetech attempts to pull out of the deal, but GetFugu refuses to give back the initial $1.75M already invested, leading to a lawsuit.
- Sept 09 - Vanity Events Holding, a micro-cap public holding company of sorts whose primary business appears to be America's Cleaning Company (again, the obvious synergies), announces a $1M investment into GetFugu. Unfortunately, 4 weeks later, it too cancels the investment, but avoids a lawsuit, presumably by not already sending over advance payments
- Sept 09 (busy month) - GetFugu announces a big deal with a company called Health Matrix where HM will sell GetFugu's services into the medical fields - comes with a $5M licensing fee to be paid over the next 12months, so we should see that revenue start to show up in the financials (or not...)
- Dec 09 - GetFugu announces lawsuit against "foreign nationals" for trade libel and defamation, attempting to depress the stock price - I believe the Company is capable of doing that on its own
- February 2010 - GetFugu breathlessly announces a big revenue deal with Illusive Media, where Illusive will guarantee the purchasing of at least 8 key words at a price of $500K/month per keyword - Unfortunately, if you go to the home page of Illusive Media today, you'll see a big note essentially saying "We have nothing to do with GetFugu and are investigating how the press release came about" - probably my favorite GF story so far - does the SEC even pay attention?
For those interested in a longer look at the company through public filings, see below:
SEC Filings - a Timeline of an Always Amusing Company
On August 29, 2008, Media Power, Inc, an "augmented reality" company controlled by Carl Freer, purchased 4M shares or 48% of a public shell company called Madero for $264,000. At that point, Madero's CEO/sole director, Mike Lizarraga, resigned and was replaced by Richard Jenkins as Chairman/CEO, etc and sole director.
On January 30, 2009, Jenkins resigns as Chairman/CEO, etc, and is replaced by Jason Irwin, an accountant. In addition, 3 new board members are appointed, including Irwin. On Feb 13, 2009, Madero changes its name to Get Fugu. March 5, 2009, company dismisses its auditor, replacing it with a new one - not a big deal, but not normally a positive either, especially since the auditor have a Going Concern issue filed in SEC documents. April 4, 2009 - Irwin resigns as CEO, and is replaced by Bernie Stolar, a respected video game executive and my former boss.
On April 9, 2009, the company acquires a set of patent applications from a company called the Mara Group - the price was 25M shares (out of 180M after a 12 for 1 split) - the owner of Mara Group? None other than Carl Freer, who now controls 51M shares after this transaction, although he is at this point neither a Director nor an Officer. In July, the company is prompted by the SEC to fully disclose that Freer has management control over the company, and the company is forced to defend the patent transaction on a variety of levels.
In August, 2009, the company is late filing its 10Q report, making it the 3rd consecutive time it has missed its filing deadline with the SEC - probably not a good sign. Company is also forced to significantly restate its Q1 filings to accurately reflect its share count and how it paid some vendors with shares, which were undervalued by an amazing 99%. Company then dismisses its accounting firm for 2nd time in 8 months - going badly...Of course it then turns out that the accounting firm (MSPC) actually had its license revoked by the Public Company Accounting Oversight Board, which meant that the SEC then informed GetFugu that it had to re-look at all its related financial statements - company retains a 3rd auditing firm - just keeps getting better
Q2 10K finally comes out. By this point, the company has appointed Carl Freer as "Chief Futurist" and granted him 10M preferred shares with 20x the voting power of common shares (hard to imagine why that was necessary, but it's not the most independent board in history) - he is still not a Director or Officer even though the company admits he controls the company.
Company terminates the 2 different investment deals referenced in September, having "found out" that the 2 companies (Spongetech and Vanity) were actually fronts for the same company (RM Enterprises) and that RM was short selling stock and is being accused of forgery and identity theft - but company will retain the first $1.75M for the time being...
Then in November, 2009, a big and always amusing 8K is released. First the company grants an amazing 20M common shares to various consulting firms for helping it in some way (the polite term is market promotion, I believe). GetFugu settles its lawsuit with Spongetech and even comes to a deal with RM Enterprises, giving it 5M shares, but keeping its $1.75M. Lots of directors are appointed to the Board of Directors, including finally, Carl Freer as President/Director, along with the disclosure of his probation for passing bad checks and the bankruptcy of his last company, Gizmondo. Company has lots of executive changes, moves to Los Angeles from SF, passes an insider trading policy, etc. Company is then late filing its 10Q, which is at least consistent with past practices.
Q3 10Q is filed in late November, but lo and behold, there is not yet any revenue from Health Matrix (may come later) - actually there is no revenue at all...The company also creates a subsidiary, GetFugu Research, which it then uses to buy a "company" from its CTO in return for 10M shares - it is unclear what the company actually does since the CTO was already an employee of Get Fugu from April 2008 forward, according to his own Linked In profile, but I'm not sure it really matters at this point anyway.
More to come this quarter - will they switch accounting firms, will they actually record any revenue from previously announced deals, will they Correct and Replace press releases, etc. - the gift that keeps on giving = Get Fugu