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ZX Spectrum reboot project's Great Ormond Street charity cash questions

£20,000 donation received, but sales suggest more due

By Gareth Corfield, 13 Apr 2017

Exclusive Tens of thousands of pounds destined for Great Ormond Street Hospital from ZX Spectrum Vega firm Retro Computers Limited appears not to have been paid.

Retro Computers Limited (RCL) had promised to pay 10 per cent from proceeds of sales of its Vega console to Great Ormond Street Hospital (GOSH) in London, England, under the terms of its licensing agreement with the owners of games bundled with the machine.

RCL did pay £20,000 to GOSH on sales of an initial 4,000 units but proceeds from the apparent sale of a remaining 6,500 devices were not made to the charity.

“I can confirm that we received donations totaling £20,000 from Retro Computers Ltd between March 2015 – October 2016,” a GOSH spokeswoman told El Reg. She confirmed no more donations were received after October 2016.

RCL’s chairman David Levy, in a statement, claimed the original 2015 agreement “had changed.”

He said RCL's former managing director Paul Andrews had been responsible for signing the deals. Andrews left RCL last year and is in legal dispute with the company.

Levy told The Register: “The information on which this is based is out of date. Paul Andrews, as Managing Director, was responsible for signing the original agreements with rights owners, but since his resignation on April 8th 2016 a number of our company's contracts and commercial arrangements have been changed.”

We asked if this meant that rights-holders agreed to delete the clause guaranteeing charitable donations to Great Ormond Street. Levy did not respond.

A 2015 statement from Levy, posted on RCL’s then-website (and archived on the Internet Wayback Machine) said that of the first 4,000 made, £5 per Vega sold would be donated to GOSH. He said 10 per cent of the net selling price for each Vega after that would be donated to GOSH. A copy of the standard licence agreement between RCL and rights-holders seen by The Reg confirms this.

According to that agreement:

On each of Licensee’s [RCL’s] computers from subsequent production runs, a donation of 10% of Licensee’s net selling price, to Great Ormond Street Hospital Children’s Charity, plus a pro-rata payment of the same amount to whichever Licensor prefers – the charity or the Licensor – as advised by Licensor to Licensor [sic] from time to time.

At £5 per unit, charitable donations from the first 4,000 Vegas comes to the £20,000 that GOSH confirmed it had received. An RCL press release from November 2016 notes that £20k was donated to the children's hospital.

Following the money

A total of 10,500 Vega units were made, Andrews told us.

The Vega’s normal net trade price was between £55 and £65 from Cornerstone Media, depending on a number of factors including customer order size. Cornerstone Media was the company handling trade sales of the Vega. It is embroiled in a legal fight with RCL over allegedly unpaid royalties.

Vegas were also sold direct through Amazon, priced at £99, according to Andrews.

Therefore a sum of between £5.50 and £6.50 should have gone to GOSH on each Vega sold via Cornerstone, or £9.90 if sold via Amazon in addition to the £20,000 donation from the first two batches of 4,000.

If all 6,500 Vegas remaining from the orignal 10,500 toal were sold direct to the public, the sum due for donation would be £64,350. If all were sold through the trade at the lowest per-unit price, the donation would be £35,750. The actual figure is more fiddly to calculate.

Break out the calculators...

Nick Cooper, Cornerstone’s former director (the company is now in liquidation) told us that revenues from 1,296 from those 6,500 machines were with Cornerstone when RCL sued it over allegedly unpaid royalties. Cornerstone disputes that royalties were improperly withheld.

In addition, Cooper claimed revenues for 1,553 units were paid to RCL via its distributors.

Taking a unit sale price of £60 (the average of the £55-£65 price range given by Cooper), revenue to RCL from those 2,849 units would be £170,940. The 10 per cent donation to GOSH would be £17,094.

However, that leaves another 3,651 units to account for – not to mention the money their supposed sale would have made.

New Vegas can today be bought from gadget shop Menkind, e-tailer Red5 and other outlets, showing that RCL continued selling Vegas after finding a new sales agent. We do not know what the sale price for these units was and RCL has stopped replying to our messages.

The £17,094 figure is an under-estimate because we do not know what the sale price of the remaining Vegas was. Also, some rights-holders asked for 100 per cent of their royalties to be donated to GOSH, an act that would have increased the amount of money RCL should have passed on to the charity.

We asked RCL to explain why the donations had not been made.

Levy said: “The current directors of Retro Computers Ltd still do not know how many units of the Vega were sold by Mr Cooper and Cornerstone,” adding that they have “spent a considerable amount of time and money attempting to recover a very substantial amount in sales revenues which were diverted away from the company.”

He alleged that Cooper and Andrews were responsible for this, something that Andrews disputes.

The multiple, separate High Court legal actions between RCL, Andrews and Cooper continue.

From the contracts seen by The Register, the same terms about charitable donations also apply to RCL's latest product, the handheld Vega+. This is being pre-offered to the public direct through RCL's website, the Indiegogo crowdfunding campaign for the Vega+ having been suspended by that site for breaking its terms and conditions. ®

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