Atari Splits Its Stock to Avoid Delisting
As antici[ated, Atari is going to do a reverse stock split in order to bring its stock price above $1 as it is doing a ten for one reverse stock split, meaning that every shareholder will get one new Atari share for every ten old Atari share he, she or it held prior to the reverse stock split.
This will at least for a little while give its management the opportunity to work out its business and financial issues until the stock dips below $1 again.
Such a consolidation requires simple majority at a special meeting of the shareholders, which should not be an issue as Atari’s parent hold more than 50% of the issued and outstanding shares of Atari.
Coverage: www.gamesindustry.biz/content_page.php?aid=20891
Atari: www.atari.com
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Real taxes on virtual assets only a matter of time
Maybe you own a snazzy home in Second Life, or an imposing castle in Ultima Online, or maybe you found a Krol Blade while questing in World of Warcraft. Though the home, the castle and the Krol Blade are all virtual property, all can be (and routinely are) exchanged for money - both virtual in-game currency and cold, hard cash. To the extent, then, that these items have real value, does their acquisition or transfer create a taxable event? If you sell that Krol Blade in-game for 800 gold pieces, for example, or auction it off on e-Bay for $80, should you be forced to report that income?
Dan Miller, a senior economist with the U.S. Congress’ Joint Economic Committee, suggests that it’s a question of “when†and not “if†Congress and the IRS will start paying attention to the virtual economy. Miller’s committee began examining issues surrounding the virtual economy in October of this year and, just recently, he attended a panel called “Tax and Finance†at the State of Play/Terra Nova symposium, a gathering at the New York Law School to discuss the issues surrounding virtual worlds. At that symposium, Miller suggested that there could be wider future congressional oversight and a revised IRS tax policy in respect of the virtual economy.
Coverage at:http://shorl.com/besestestomere(Gamespot)
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TAKE TWO Completes Preliminary Option Investigation
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) (“Take Twoâ€) has completed its preliminary independent investigation of its stock option grant practice which we reported on last summer and it has found a number of irregularities in its stock option grant practice. Accordingly, Take Two will have to restate its financials all the way back to 1997. The investigation cleared its current CEO and CFO of any wrongdoing.
Moreover, Take Two is the subject of a SEC investigation of its stock option grant practice, which will publish its findings later this year.
Options are granted as a form of future compensation to motivate employees. The idea is to grant an option to an employee, typical a senior officer, to purchase a share of the issuer at a future date at the current trading price of the issuer. This will provide the optionee with an incentive to increase the value of the issuer.
The TSX rules provides that stock options must be granted at an exercise price at no less than the trading price at the date of the grant. The TSX Venture Exchange rules provides that the exercise must not be less than the trading at the date of the grant less a discount of 15%-25% depending on the trading price of the issuer. Otherwise, investors expect that the exercise price is equal to the trading price of the issuer at the time of grant.
The major issues that the SEC has been looking at is backdating of options. Backdating can occur in a number of ways; one way is where the board declares a stock option without setting an exercise price. At a subsequent board meeting, the board sets the exercise price which will be equal to the lowest level in the period. Another way of backdating occurs when the board substitutes the actual grant date with a grant date where the stock price is lower.
Another issue of concern is springloading which means that the issuer grants options prior to the issuer releasing positive information. After the release of the positive information, the stock price will go up and the option will be in the money.
The investigations of stock option practices have mostly been aimed at issuer listed in the US. This does not mean that there are no problems with backdated options for Canadian listed issuers. Canadian listed issuers may be the subject of similar investigations in the future as Canadian listed issuers also have similar or better opportunities to backdate than US listed issuers. The Canadian rules with respect to disclosure of stock option grants are similar to those in the US prior to the implementation of the Sarbanes-Oxley Act which went into force in 2002. Under the Sarbanes-Oxley Act, stock option grants must be disclosed within two days of the grant. It is interesting that most of the irregularities in the US have occurred prior to Sarbanes-Oxley Act came into force.
A TSX listed issuer must report any grant of options to the TSX no later than 10 days after the end of the month in which the grant was made. Moreover, any grant of options to insiders must be filed by the insider no later than 10 days after the grant. This gives a TSX listed company certain room to backdate options.
A TSX Venture Exchange listed issuer has less room to backdate options as it must issue a press release each time it grants options to its directors and officers.
It will be interesting to see how widespread the problem of backdating is in Canada. Research In Motion Limited (TSX: RIM) is subject to such an investigation at the moment but it is spearheaded from the SEC as the RIM stock is dually listed at NASDAQ.
Coverage: www.gamasutra.com/php-bin/news_index.php?story=12275
Take Two: www.take2games.com![]("http://www.davis.ca/community/aggbug.aspx?PostID=875")
Hello Moto? No Halo for You!
In-Fusio is suing Microsoft for wrongful termination of contract amidst accusations that Microsoft is stonewalling In-Fusio's designs for a mobile phone version of superselling videogame title Halo.
Microsoft terminated its US $2 million deal with French company In-Fusio after In-Fusio failed to pay the second of four $500,000 installments to Microsoft. In-Fusio has fired back that it HAD to withhold payment after Microsoft refused to approve In-Fusio's game designs with "little or no explanation."
In-Fusio is seeking damages and an injunction on Microsoft.
More on this story at Games Industry:http://www.gamesindustry.biz/content_page.php?aid=21961
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GERMAN CRACKDOWN
Germany’s ratings board has refused to rate the upcoming 360 shooter “Crackdownâ€. As a result, the game cannot be sold to minors, can only be sold in person, and cannot be displayed or advertised in stores. As you can imagine, this decision will seriously impair Microsoft’s ability to market Crackdown in Germany. Crackdown has been rated M by the ESRB.
The German rating board has taken a similar approach to “Dead Rising†and “Gears of Warâ€, as the country seems to be taking a hard line against violent video games.
Coverage at:http://www.gamespot.com/news/6163793.html(GameSpot)
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DISGRUNTLED CONSUMER LAUNCHES WII LAWSUIT
As you have probably heard, there have been some problems with the wrist straps for Nintendo’s new Wii controllers and Nintendo announced a voluntary replacement program last week. In the meantime, a Wii purchaser from Texas has filed a lawsuit against Nintendo, claiming that Nintendo engaged in “unfair or deceptive practices†by telling consumers that the Wiimote’s wrist strap was meant to prevent the controller from flying from a user’s hand during use, but then providing a strap that was not effective for that intended use. The lawsuit also claims that the wrist strap defects are a breach of warranty.
Nintendo has responded by stating that the lawsuit is without merit.
Coverage at:http://shorl.com/buvomyfroduka(GameSpot)
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Atari’s Shareholders Approves Stock split
As reported in March of last year, Atari received a delisting warning from NASDAQ pursuant to which Atari’s stock would be delisted from NASDAQ unless its traded above $1 for more than 30 days.
In November Atari decided to do a ten for one reverse stock split of its stock, which means that each shareholder will receive one Atari share for every ten Atari shares it held prior to the reverse stock split. This does not change the value of the company but increases the value of each share tenfold. On January 4, 2007, Atari’s shareholders approved the reverse stock split.
It will be interesting to see how the Atari stock will fare in the future. Shortly before the reverse stock split, Atari’s stock traded at $0.50 per share and theoretically after the stock split the stock should trade at $5 per share. Historically, this has not been the case and typically a reverse stock split has only provided a struggling issuer with temporarily relief as the stock price often will spiral towards below $1 per share shortly after a reverse stock split. However, if nothing else, the stock split will provide Atari’s management with time to solve its financial and business problems before the stock dips below $1 again.
We will await the situation in suspense.
Coverage: www.gamasutra.com/php-bin/news_index.php?story=12275
Atari: www.atari.com
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