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As filed with the Securities and Exchange Commission on January 11, 2001
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Take-Two Interactive Software, Inc.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
575 Broadway
New York, New York 10012
Delaware (212) 334-6633 51-0350842
(State or other jurisdiction (Address, including zip code, and telephone (I.R.S. employer number,
of incorporation including area code, of registrant's principal identification number)
or organization executive offices)
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Ryan A. Brant, Chairman
Take-Two Interactive Software, Inc.
575 Broadway
New York, New York 10012
(212) 334-6633
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
Robert H. Cohen, Esq.
Morrison Cohen Singer & Weinstein LLP
750 Lexington Avenue
New York, New York 10022
Telephone: (212) 735-8680
Telecopier: (212) 735-8708
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box /X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. / /
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If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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Calculation of Fee.
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Proposed Proposed Amount of
Title of Shares Amount to be Maximum Offering Maximum Registration Fee
to be Registered Registered Price Per Share Aggregate Offering
Price
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Common Stock, 557,103(2) $11.345(3) $6,320,334 $1,669
$.01 par value(1)
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(1) Represents shares to be sold by the selling stockholder.
(2) Pursuant to Rule 416 of the Securities Act of 1933, there are also being
registered such additional shares as may be issued because of future stock
dividends, stock distributions, stock splits or similar capital readjustments.
(3) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c) of the Securities Act of 1933, as amended, the
registration fee has been calculated based upon the average of the high and low
prices as reported by Nasdaq for the registrant's Common Stock on January 5,
2001.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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Take-Two Interactive Software, Inc.
This Prospectus relates to the resale of up to 557,103 shares of common
stock by a selling stockholder.
The selling stockholder may sell these shares from time to time through
ordinary brokerage transactions in the over-the-counter markets, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale, at
negotiated prices and in certain other ways, as described under "Plan of
Distribution" on page 12. We will not receive any of the proceeds from the sale
of these shares.
Our common stock is traded on the Nasdaq National Market under the
symbol TTWO. On January 5, 2001, the closing sale price of our common stock as
reported by Nasdaq was $11.19.
Investing in our common stock is speculative and involves a high degree
of risk. See "Risk Factors" beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _________ __, 2001.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other financial and business information with the SEC. Our SEC filings are
available on the SEC's web site at http://www.sec.gov. You also may read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information about their public reference rooms,
including copy charges.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede information in this prospectus and
in our other filings with the SEC. We incorporate by reference into this
prospectus our Annual Report on Form 10-K for the year ended October 31, 1999
and amendment thereto on Form 10-K/A, our Quarterly Reports on Form 10-Q for the
quarterly periods ended January 31, 2000, April 30, 2000 and July 31, 2000; our
Current Report on Form 8-K dated March 14, 2000; our Current Report on Form
8-K/A dated May 31, 2000; our Current Report on Form 8-K dated October 3, 2000;
our Proxy Statement dated October 30, 2000, and the description of our Common
Stock which is contained in our Registration Statement on Form 8-A, each of
which we already have filed with the SEC. We also incorporate by reference into
this prospectus any future filings we make with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until all of the
shares of common stock covered by this Prospectus are sold.
You may request a copy of these filings at no cost, by writing or
calling us at the following address:
Take-Two Interactive Software, Inc.
575 Broadway
New York, New York 10012
Attention: Ryan A. Brant
Telephone: (212) 334-6633
You should rely only on the information contained in, or incorporated
by reference into, this prospectus or any applicable prospectus supplement. We
have not authorized anyone to provide you with additional or different
information. You should not assume that the information in this prospectus, any
prospectus supplement, or any document incorporated by reference is accurate as
of any date other than the date of those documents.
You may also obtain from the SEC a copy of the Registration Statement
and exhibits that we filed with the SEC when we registered the shares of common
stock. The Registration Statement may contain additional information that may be
important to you.
FORWARD-LOOKING STATEMENTS
We make statements in this prospectus and the documents incorporated by
reference that are considered forward-looking statements under the federal
securities laws. Such forward-looking statements are based on the beliefs of our
management as well as assumptions made by and information currently available to
them. The words "anticipate," "believe," "may," "estimate," "expect," and
similar expressions, and variations of such terms or the negative of such terms,
are intended to identify such forward-looking statements.
All forward-looking statements are subject to certain risks,
uncertainties and assumptions. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, our actual results,
performance or achievements could differ materially from those expressed in, or
implied by, any such forward-looking statements. Important factors that could
cause or contribute to such difference include those
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discussed under "Risk Factors" in this Prospectus and in our Annual Report on
Form 10-K. You should not place undue reliance on such forward-looking
statements, which speak only as of their dates. We do not undertake any
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. You should carefully
consider the information set forth under "Risk Factors" in this prospectus.
ABOUT TAKE-TWO INTERACTIVE SOFTWARE, INC.
We are a leading worldwide developer, publisher and distributor of
interactive software games. Our software operates on multimedia personal
computers and video game console platforms manufactured by Sony, Nintendo and
Sega. We are one of the largest distributors of interactive software games in
the United States and one of the top ten publishers of interactive software
games in Europe.
We were incorporated in the state of Delaware in September 1993. Our
principal executive offices are located at 575 Broadway, New York, New York
10012, and our telephone number is (212) 334-6633.
RISK FACTORS
The shares offered hereby are speculative and involve a high
degree of risk. Prospective Investors should carefully consider the following
risk factors before making an investment decision.
Many of our titles have short lifecycles and fail to generate significant
revenues.
The market for interactive entertainment software is characterized by
short product lifecycles and frequent introduction of new products. Many
software titles do not achieve sustained market acceptance or do not generate a
sufficient level of sales to offset the costs associated with product
development. A significant percentage of the sales of new titles generally
occurs within the first three months following their release. Therefore, our
continued profitability depends upon our ability to develop and sell new,
commercially successful titles and to replace revenues from titles in the later
stages of their lifecycles. Any competitive, financial, technological or other
factor which delays or impairs our ability to introduce and sell our software
could adversely affect our future operating results.
A significant portion of our revenues are derived from a limited number of
titles.
For the year ended October 31, 1999, ten titles accounted for
approximately 33.5% of our revenues, with Grand Theft Auto products accounting
for 18.7% of our revenues. For the nine months ended July 31, 2000, ten titles
accounted for approximately 18.7% of our revenues. Our future titles may not be
commercially viable. We also may not be able to release new titles within
scheduled release times or at all. If we fail to continue to develop and sell
new, commercially successful titles, our revenues and profits may decrease
substantially.
Our business is dependent on licensing and publishing arrangements with third
parties.
Our success depends on our ability to identify and exploit new titles on
a timely basis. We have entered into agreements with third parties to acquire
the rights to publish and distribute interactive entertainment software. These
agreements typically require us to make advance payments, pay royalties and
satisfy other conditions. Our advance payments may not be sufficient to permit
developers to develop new software successfully. In addition, software
development costs, promotion and marketing expenses and royalties payable to
software developers have increased significantly in recent years and reduce the
potential profits derived from sales of our software. Future sales of our titles
may not be sufficient to recover advances
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to software developers, and we may not have adequate financial and other
resources to satisfy our contractual commitments. If we fail to satisfy our
obligations under these license agreements, the agreements may be terminated or
modified in ways that may be burdensome to us.
Our profitability depends upon our ability to continue to license
popular properties on commercially feasible terms. Numerous companies compete
intensely for properties, and we may not be able to license popular properties
on favorable terms or at all in the future.
We continually need to develop new interactive entertainment software for
various operating systems.
We depend on third-party software developers and our internal
development studios to develop new interactive entertainment software within
anticipated release schedules and cost projections. Most of our titles are
externally developed. If developers experience financial difficulties,
additional costs or unanticipated development delays, we will not be able to
release titles according to our schedule and may incur losses.
The development of new interactive entertainment software is lengthy,
expensive and uncertain. Considerable time, effort and resources are required to
complete development of our proposed titles. We have in the past and may in the
future experience delays in introducing new titles. Delays, expenses, technical
problems or difficulties could force the abandonment of or material changes in
the development and commercialization of our proposed titles. In addition, the
costs associated with developing titles for use on new or future platforms may
increase our development expenses.
The software incorporated into our titles may contain defects or errors
which do not become apparent until after commercial introduction. Remedying such
errors may delay our plans, cause us to incur additional costs and adversely
affect our operations.
We are subject to various distribution risks.
Our distribution business accounts for a substantial portion of our
revenues. Our distribution operations require us to:
o maintain our operating margins;
o secure adequate supplies of currently popular software
and hardware on a timely and competitive basis;
o continually turn our inventories; and
o maintain effective inventory and cost controls.
We are dependent on third-party software and hardware manufacturers,
developers, distributors and dealers, including our competitors, to provide
adequate inventories of popular interactive entertainment software to our retail
customers when needed and on favorable pricing terms. We generally do not
maintain agreements with suppliers. Suppliers may sell their software directly
to our retail customers, rather than through us, on more favorable terms than
those provided to us. We have historically purchased a significant portion of
our titles from a limited number of suppliers. If suppliers do not provide us
with competitive titles on favorable terms without delays, we will be unable to
deliver titles on competitive terms to our retail customers when they require
them.
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We may fail to anticipate changing consumer preferences.
Our business is speculative and is subject to all of the risks generally
associated with the interactive entertainment software industry, which has been
cyclical in nature and has been characterized by periods of significant growth
followed by rapid declines. Our future operating results will depend on numerous
factors beyond our control, including:
o the popularity, price and timing of new software and
hardware platforms being released and distributed by us
and our competitors;
o international, national and regional economic
conditions, particularly economic conditions adversely
affecting discretionary consumer spending;
o changes in consumer demographics;
o the availability of other forms of entertainment; and
o critical reviews and public tastes and preferences, all
of which change rapidly and cannot be predicted.
In order to plan for acquisition and promotional activities, we must
anticipate and respond to rapid changes in consumer tastes and preferences. A
decline in the popularity of interactive entertainment software or particular
platforms could cause sales of our titles to decline dramatically. The period of
time necessary to develop new game titles, obtain approvals of manufacturers and
produce CD-ROMs or game cartridges is unpredictable. During this period,
consumer appeal of a particular title may decrease, causing projected sales to
decline.
Rapidly changing technology and platform shifts could hurt our operating
results.
The interactive software market and the PC and video game industries in
general are associated with rapidly changing technology, which often leads to
software and platform obsolescence and significant price erosion over the life
of a product. The introduction of new platforms and technologies can render
existing software obsolete or unmarketable. We expect that as more advanced
platforms are introduced, consumer demand for software for older platforms will
decline. As a result, our titles developed for such platforms may not generate
sufficient sales to make such titles profitable. Obsolescence of software or
platforms could leave us with increased inventories of unsold titles and limited
amounts of new titles to sell to consumers.
We have devoted and will continue to devote significant development and
marketing resources on products designed for next-generation video game systems,
such as the PlayStation(R)2, that have not yet achieved large installed bases.
We recently released four titles for the PlayStation 2 and have several titles
under development for this platform. If PlayStation 2 does not achieve wide
acceptance by consumers or if Sony is unable to ship a significant number of
PlayStation 2 units in an timely fashion, we will have spent a substantial
amount of our resources for this platform without corresponding revenues, which
would have a material adverse effect on our business, operating results and
financial condition.
We need to anticipate technological changes and continually adapt our
new titles to emerging platforms to remain competitive in terms of price and
performance. Our success depends upon our ability and the ability of third-party
developers to adapt software to operate on and to be compatible with the
products of original equipment manufacturers and to function on various hardware
platforms and operating systems. If we design titles to operate on new
platforms, we may be required to make substantial development investments well
in advance of platform introductions, and we will be subject to the risks that
any new platform may not achieve initial or continued market acceptance.
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A number of software publishers who compete with us have developed or
are currently developing software for use by consumers over the Internet. Future
increases in the availability of such software or technological advances in such
software or the Internet could result in a decline in platform-based software
and impact our sales. Direct sales of software by major manufacturers over the
Internet would adversely affect our distribution business.
Returns of our titles may adversely affect our operating results.
Our arrangements with retailers for published titles require us to
accept returns for stock balancing, markdowns or defects. We establish a reserve
for future returns of published titles at the time of sales, based primarily on
these return policies and historical return rates, and we recognize revenues net
of returns. We have historically experienced a return rate of approximately
10% of gross publishing revenues.
Our distribution arrangements with retailers generally do not give them
the right to return titles to us or to cancel firm orders, although we do accept
returns for stock balancing, markdowns and defects. We sometimes negotiate
accommodations to retailers, including price discounts, credits and returns,
when demand for specific titles falls below expectations. Historically, less
than 1% of distribution revenues represent write-offs for returns.
Our sales returns and allowances for the years ended October 31, 1998
and 1999 and the nine months ended July 31, 2000, were $13,672,432, $25,146,691
and $21,518,562, respectively. If return rates significantly exceed our
estimates, our operating results will be materially adversely affected.
Our quarterly operating results may vary significantly.
We have experienced and may continue to experience wide fluctuations in
quarterly operating results as a result of:
o delays in the introduction of new titles;
o the size and timing of product and corporate
acquisitions;
o variations in sales of titles designed to operate on
particular platforms;
o development and promotional expenses relating to the
introduction of new titles, sequels or enhancements of
existing titles;
o projected and actual changes in platforms;
o the timing and success of title introductions by our
competitors;
o product returns;
o the accuracy of retailers' forecasts of consumer demand;
and
o the timing of orders from major customers.
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Sales of our titles are seasonal, with peak shipments typically
occurring in the fourth calendar quarter (our fourth and first fiscal quarters)
as a result of increased demand for interactive entertainment software during
the year-end holiday season.
The interactive entertainment software industry is highly competitive.
We compete for both licenses to properties and the sale of interactive
entertainment software with Sony, Nintendo and Sega, each of which is the
largest developer and marketer of software for its platforms. Sony and Nintendo
currently dominate the industry and have the financial resources to withstand
significant price competition and to implement extensive advertising campaigns,
particularly for prime-time television. These companies may also increase their
own software development efforts.
In addition, we compete with domestic public and private companies,
international companies, large software companies and media companies. Many of
our competitors have far greater financial, technical, personnel and other
resources than we do, and many are able to carry larger inventories, adopt more
aggressive pricing policies and make higher offers to licensors and developers
for commercially desirable properties than we can. Our titles also compete with
other forms of entertainment such as motion pictures, television and audio and
video cassettes featuring similar themes, on-line computer programs and forms of
entertainment which may be less expensive or provide other advantages to
consumers.
Retailers typically have limited shelf space and promotional resources,
and competition is intense among an increasing number of newly introduced
interactive entertainment software titles for adequate levels of shelf space and
promotional support. Competition for retail shelf space is expected to increase,
which may require us to increase our marketing expenditures just to maintain
current levels of sales of our titles. Competitors with more extensive lines and
popular titles frequently have greater bargaining power with retailers.
Accordingly, we may not be able to achieve the levels of support and shelf space
that such competitors receive. Similarly, as competition for popular properties
increases, our cost of acquiring licenses for such properties is likely to
increase, possibly resulting in reduced margins. Prolonged price competition,
increased licensing costs or reduced operating margins would cause our profits
to decrease significantly.
We depend on console manufacturers for supplies of our games.
We depend on non-exclusive licenses with Sony, Nintendo and Sega both
for the right to publish titles for their platforms and for the manufacture of
our software designed for use on their platforms. Our licenses for the
PlayStation(R), PlayStation 2, Nintendo 64, Nintendo GameBoy and Sega Dreamcast
platforms require that we obtain approval for the publication of new titles on a
title-by-title basis. As a result, the number of titles we are able to publish
for these platforms may be limited. If any of these licenses were terminated, we
would lack alternative sources for the manufacture of titles for these platforms
and would be unable to develop and publish software developed for these
platforms.
Each of Sony, Nintendo and Sega is the sole manufacturer of the titles
we publish under license from such manufacturer. Each platform license provides
that the manufacturer may raise prices for the titles at any time and grants the
manufacturer substantial control over the release of new titles. The relatively
long manufacturing cycle for cartridge-based titles for the Nintendo platform
(from 30 to 45 days) requires us to accurately forecast retailer and consumer
demand for our titles far in advance of sales. Nintendo cartridges are also more
expensive to manufacture than CD-ROMs, resulting in greater inventory risks for
those titles. Each of these manufacturers also publishes software for its own
platforms and manufactures titles for all of its other licensees and may choose
to give priority to its own titles or those of other publishers if it has
insufficient manufacturing capacity or if there is increased demand.
These manufacturers may not have sufficient production capacity to
satisfy our scheduling requirements during any period of sustained demand. If
manufacturers do not supply us with finished titles on
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favorable terms without delays, our operations could be materially interrupted,
and our operating results could be adversely affected.
We may not be able to protect our proprietary rights or avoid claims that we
infringe on the proprietary rights of others.
We develop proprietary software and technologies and have obtained the
rights to publish and distribute software developed by third parties. We attempt
to protect our software and production techniques under copyright, trademark and
trade secret laws as well as through contractual restrictions on disclosure,
copying and distribution. We do not hold any patents or registered copyrights.
Interactive entertainment software is susceptible to unauthorized
copying. Unauthorized third parties may be able to copy or to reverse engineer
our software to obtain and use programming or production techniques that we
regard as proprietary. In addition, our competitors could independently develop
technologies substantially equivalent or superior to our technologies.
As the amount of interactive entertainment software in the market
increases and the functionality of this software further overlaps, we believe
that interactive entertainment software will increasingly become the subject of
claims that such software infringes the copyrights or patents of others. From
time to time, we receive notices from third parties alleging infringement of
their proprietary rights. Although we believe that our software and technologies
and the software and technologies of third-party developers and publishers with
whom we have contractual relations do not and will not infringe or violate
proprietary rights of others, it is possible that infringement of proprietary
rights of others may occur. Any claims of infringement, with or without merit,
could be time-consuming, costly and difficult to defend.
Our rapid expansion and acquisitions may strain our operations.
We have expanded through internal growth and acquisitions, which have
placed and may continue to place a significant strain on our management,
administrative, operational, financial and other resources. We have released a
significant number of titles on new platforms, expanded our publishing and
distribution operations, increased our advances to developers and manufacturing
expenditures, enlarged our work force and expanded our presence in international
markets. To successfully manage this growth, we must continue to implement and
improve our operating systems as well as hire, train and manage a substantial
and increasing number of management, technical, marketing, administrative and
other personnel. We may be unable to effectively manage rapidly expanded
operations which are geographically dispersed.
We have acquired rights to various properties and businesses, and we
intend to continue to pursue opportunities by making selective acquisitions
consistent with our business strategy. We may be unable to successfully
integrate any new personnel, property or business into our operations. If we are
unable to successfully integrate future personnel, properties or businesses into
our operations, we may incur significant charges.
Our publishing and distribution activities require significant amounts
of capital. We may seek to obtain additional debt or equity financing to fund
the cost of continuing expansion. The issuance of equity securities would result
in dilution to the interests of our stockholders.
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A limited number of customers may account for a significant portion of our
sales.
Sales to our five largest customers accounted for approximately 22.4%,
24.5% and 22.8% of our revenues for the years ended October 31, 1998 and 1999
and the nine months ended July 31, 2000. The loss of our relationships with
principal customers or a decline in sales to principal customers could harm our
operating results.
We have significant outstanding indebtedness and have granted security interests
to debtholders.
We have incurred substantial indebtedness in order to finance our
expanded operations. As of July 31, 2000, $32,291,878 was outstanding under a
line of credit agreement between us and a group of lenders led by Bank of
America, N.A., as agent. This line of credit provides for borrowings of up to
$75,000,000. Borrowings under the line of credit with Bank of America are
collateralized by our accounts receivable, inventory, equipment, general
intangibles, securities and other personal property, including the capital stock
of our domestic subsidiaries. The loan agreement contains certain financial
covenants and limits or prohibits us, subject to certain exceptions, from
declaring or paying cash dividends, merging or consolidating with another
corporation, selling assets (other than in the ordinary course of business),
creating liens and incurring additional indebtedness. If we default on our
obligations, the banks could elect to declare our indebtedness to be due and
payable and foreclose on our assets. Our UK subsidiary also has outstanding
indebtedness of $14,186,488 at July 31, 2000 with Barclays Bank. In addition, in
July 2000, we incurred an additional $15,000,000 of indebtedness under a
subordinated loan agreement.
Rating systems for interactive entertainment software, potential legislation and
consumer opposition could inhibit sales of our products.
The home video game industry requires interactive entertainment software
publishers to provide consumers with information relating to graphic violence or
sexually explicit material contained in software titles. Certain countries have
also established similar rating systems as prerequisites for sales of
interactive entertainment software in such countries. We believe that we comply
with such rating systems and display the ratings received for our titles. Our
software titles generally receive a rating of "G" (all ages) or "T" (age 13 and
over), although certain of our titles receive a rating of "M" (age 18 and over),
which may limit the potential markets for these titles.
Several proposals have been made for federal legislation to regulate the
interactive entertainment software, motion picture and recording industries,
including a proposal to adopt a common rating system for interactive
entertainment software, television and music containing violence and sexually
explicit material and an inquiry by the Federal Trade Commission with respect to
the marketing of such material to minors. Consumer advocacy groups have also
opposed sales of interactive entertainment software containing graphic violence
and sexually explicit material by pressing for legislation in these areas and by
engaging in public demonstrations and media campaigns. If any groups were to
target our titles, we might be required to significantly change or discontinue a
particular title. In addition, certain retailers, such as WalMart, Kmart, Sears
and Target Stores, have declined to sell interactive entertainment software
containing graphic violence or sexually explicit material, which also limits the
potential markets for certain of our games.
We are subject to credit and collection risks.
Our sales are typically made on credit, with terms that vary depending
upon the customer and the demand for the particular title being sold. We do not
hold any collateral to secure payment by our customers. As a result, we are
subject to credit risks, particularly in the event that any of our receivables
represent sales to a limited number of retailers or are concentrated in foreign
markets. If we are unable to collect on accounts receivable as they become due
and such accounts are not covered by insurance, it could adversely affect our
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financial condition. Our accounts receivable, less an allowance for doubtful
accounts and product returns, at July 31, 2000 were $85,173,092.
We are subject to risks and uncertainties of international trade.
Sales in international markets, primarily in the United Kingdom and
other countries in Europe and the Pacific Rim, have accounted for an increasing
portion of our revenues. For the years ended October 31, 1998 and 1999 and the
nine months ended July 31, 2000, sales in international markets accounted for
approximately 21.6%, 34.6% and 32.8% of our revenues. We are subject to risks
inherent in foreign trade, including:
o increased credit risks;
o tariffs and duties;
o fluctuations in foreign currency exchange rates;
o shipping delays; and
o international political, regulatory and economic
developments, all of which can have a significant impact
on our operating results.
Sales in France and Germany are made in local currencies. We do not
engage in foreign currency hedging transactions.
We are dependent upon our key executives and personnel.
Our success is largely dependent on the personal efforts of certain key
personnel. The loss of the services of one or more of these key employees could
adversely affect our business and prospects. Our success is also dependent upon
our ability to hire and retain additional qualified operating, marketing,
technical and financial personnel. Competition for qualified personnel in the
computer software industry is intense, and we may have difficulty hiring or
retaining necessary personnel in the future. If we fail to hire and retain
necessary personnel as needed, our business will be significantly impaired.
The market price of our common stock may be volatile.
The market price of the common stock may be highly volatile. Disclosures
of our operating results, announcements of various events by us or our
competitors and the development and marketing of new titles affecting the
interactive entertainment software industry may cause the market price of the
common stock to change significantly over short periods of time. Sales of shares
under this prospectus may have a depressive effect on the market price of our
common stock.
Future sales of shares of our common stock could affect the market price of our
common stock and our ability to raise additional capital.
We have previously issued a substantial number of shares of common
stock, which are eligible for resale under Rule 144 of the Securities Act, and
may become freely tradeable. We have also granted registration rights with
respect to a substantial number of shares of common stock, including shares
issuable upon the exercise of options and warrants. If holders of registration
rights choose to exercise such rights and sell shares of common stock in the
public market, or if holders of currently restricted shares choose to sell such
shares in the public market under Rule 144, the prevailing market price for the
common stock may decline. Future public sales of shares of common stock may
adversely affect the market price of our common stock or our future ability to
raise capital by offering equity securities.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling
stockholder.
SELLING STOCKHOLDER
The following table sets forth certain information with respect to the
selling stockholder. The selling stockholder does not have a material
relationship with us.
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Shares Shares Beneficially Percentage of Shares
Beneficially Owned Shares to be Sold Owned After Beneficially Owned
Selling Stockholder Prior to Offering in the Offering Offering After Offering
------------------- ----------------- --------------- -------- --------------
<S> <C> <C> <C> <C>
Video Game Holdings, LLC 557,103 557,103 - -
</TABLE>
PLAN OF DISTRIBUTION
We have agreed to pay all expenses in connection with the registration of
the shares of common stock for sale by the selling stockholder. The selling
stockholder will bear all brokerage commissions and similar selling expenses, if
any, attributable to sales of their shares. Sales of shares may be effected by
the selling stockholder from time to time in one or more types of transactions,
any of which may involve crosses and block transactions, made on Nasdaq, in the
over-the-counter market, on a national securities exchange, in privately
negotiated transactions or otherwise or in a combination of such transactions at
prices and at terms and market prices prevailing at the time of sale or at
privately negotiated prices. These transactions may or may not involve brokers
or dealers. The selling stockholder has agreed to certain restrictions on the
sale of the shares.
Without limiting the generality of the foregoing, the shares may be sold in
one or more of the following types of transactions: (a) a block trade in which
the broker-dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus; (c) an exchange
distribution in accordance with the rules of such exchange; (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
and (e) face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the selling
stockholder may arrange for other brokers or dealers to participate in the
resale. In addition, any shares covered by this prospectus which qualify for
sale pursuant to Section 4(1) of the Securities Act of 1933 or Rule 144
promulgated thereunder may be sold under such provisions rather than pursuant to
this prospectus.
Brokers or dealers may receive compensation in the form of commissions,
discounts or concessions from the selling stockholder in amounts to be
negotiated in connection with sales. Such brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933. In this case,
any commissions, discounts or concessions received by broker-dealers and any
profit on the resale of the shares sold by them may be deemed to be underwriting
discounts or commissions under the Securities Act of 1933. Compensation to be
received by broker-dealers and retained by the selling stockholder in excess of
usual and customary commissions, will, to the extent required, be set forth in a
supplement to this prospectus. Any dealer or broker participating in any
distribution of the shares may be required to deliver a copy of this prospectus,
including any supplements, to any person who purchases any of the shares from or
through such dealer or broker.
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<PAGE>
During such time as they may be engaged in a distribution of the shares
included in this prospectus, the selling stockholder is required to comply with
Regulation M promulgated under the Securities Exchange Act of 1934. With certain
exceptions, Regulation M precludes the selling stockholder, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of our common stock.
It is possible that a significant number of shares may be sold under this
prospectus. Accordingly, these sales or the possibility of such sales may have a
depressive effect on the market price of our common stock.
INDEMNIFICATION
The General Corporation Law of the State of Delaware contains provisions
permitting our directors and officers to be indemnified against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorneys'
fees, as the result of an action or proceeding in which they may be involved by
reason of having been a director or officer. Our Certificate of Incorporation
includes a provision that limits the personal liability of our directors to us
or our stockholders for monetary damages arising from a breach of their
fiduciary duties as directors to the fullest extent now or hereafter permitted
by the Delaware General Corporation Law. This provision does not prevent us or
our stockholders from seeking equitable remedies, such as injunctive relief or
rescission. If equitable remedies are found not to be available to stockholders
in any particular case, stockholders may not have any effective remedy against
actions taken by directors that constitute negligence or gross negligence.
Our Certificate of Incorporation provides that we shall indemnify our
officers and directors to the maximum extent permitted from time to time under
the Delaware General Corporation Law and requires us to advance expenses to any
director or officer to the extent that such indemnification and advancement of
expenses is permitted under such law, as it may from time to time be in effect.
In addition, our By-laws require us to indemnify, to the fullest extent
permitted by law, any director, officer, employee or agent for acts which such
person reasonably believes are not in violation of our corporate purposes as set
forth in our Certificate of Incorporation. At present, the Delaware General
Corporation Law provides that, in order to be entitled to indemnification, an
individual must have acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to our best interests.
Insofar as indemnification against liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and persons controlling us
pursuant to the foregoing provisions or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
LEGAL MATTERS
Morrison Cohen Singer & Weinstein LLP of New York, New York will pass upon
the validity of the shares of common stock being offered with this prospectus.
EXPERTS
The financial statements of Take-Two Interactive Software, Inc.
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended October 31, 1999 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
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<PAGE>
The financial statements of Jack of All Games, Inc. as of and for the year
ended December 31, 1997 have been included in reliance upon the reports of
Aronowitz, Chaiken & Hardesty, LLP, given upon the authority of that firm as
experts in accounting and auditing.
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<PAGE>
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We have not authorized any dealer, salesperson or any other person to give
any information or to make any representations other than those contained in
this prospectus. You must not rely on unauthorized information. This prospectus
does not offer to sell or solicit an offer to buy securities in any jurisdiction
in which it is unlawful. Neither the delivery of this prospectus nor any sale
made under this prospectus shall imply that the information in this prospectus
is correct as of any time after the date of this prospectus.
--------------
TABLE OF CONTENTS
Page
----
Where You Can Find More Information ....................................... 2
Forward Looking Statements ................................................ 2
About Take-Two Interactive Software, Inc. ................................. 3
Recent Developments ....................................................... 3
Risk Factors .............................................................. 3
Use of Proceeds ........................................................... 11
Selling Stockholders ...................................................... 11
Plan of Distribution ...................................................... 11
Indemnification ........................................................... 12
Legal Matters ............................................................. 13
Experts ................................................................... 13
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557,103 Shares
Common Stock
TAKE-TWO INTERACTIVE
SOFTWARE, INC.
---------------------
PROSPECTUS
---------------------
___________ __, 2001
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses payable in connection with the issuance and distribution of the
securities being registered (estimated except in the case of the registration
fee) are as follows:
Amount
Registration Fee $ 1,669
NASDAQ Listing Fee 5,571
Printing 2,500
Legal and Accounting Fees and Expenses 30,000
Transfer Agents and Registrars Fees 2,000
Miscellaneous 3,260
--------
TOTAL $ 45,000
--------
--------
The above fees will be paid by the Company.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL") contains
provisions entitling the Company's directors and officers to indemnification
from judgments, finds, amounts paid in settlement and reasonable expenses
(including attorneys' fees) as the result of an action or proceeding in which
they may be involved by reason of having been a director or officer of the
Company. In its Certificate of Incorporation, the Company has included a
provision that limits, to the fullest extent now or hereafter permitted by the
DGCL, the personal liability of its directors to the Company or its stockholders
for monetary damages arising from a breach of their fiduciary duties as
directors. Under the DGCL as current in effect, this provision limits a
director's liability except where such director (i) breaches his duty of loyalty
to the Company or its stockholders, (ii) fails to act in good faith or engaged
in intentional misconduct or a knowing violation of law, (iii) authorizes
payment of an unlawful dividend or stock purchase or redemption as provided in
Section 174 of the DGCL, or (iv) obtains an improper personal benefit. This
provision does not prevent the Company or its stockholders from seeking
equitable remedies, such an injunctive relief or recision. If equitable remedies
are found not to be available to stockholders in any particular case,
stockholders may not have any effective remedy against actions taken by
directors that constitute negligence or gross negligence.
The Certificate of Incorporation also includes provisions to the effect
that (subject to certain exceptions) the Company shall, to the maximum extent
permitted from time to time under the law of the State of Delaware, indemnify,
and upon request shall advance expenses to, any director or officer to the
extent that such indemnification and advancement of expenses is permitted under
such law, as it may from time to time be in effect. In addition, the By-laws
require the Company to indemnify, to the fullest extent permitted by law, any
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<PAGE>
director, officer, employee or agent of the Company for acts which such person
reasonably believes are not in violation of the Company's corporate purposes as
set forth in the Certificate of Incorporation. At present, the DGCL provides
that, in order to be entitled to indemnification, an individual must have acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the Company's best interests.
Item 16. Exhibits
(a) Exhibits
Exhibit No.
5 Opinion of Morrison Cohen Singer & Weinstein LLP regarding legality of
securities being registered.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Aronowitz, Chaiken & Hardesty, LLP.
23.3 Consent of Morrison Cohen Singer & Weinstein LLP (included in
Exhibit 5).
24 Power of Attorney included in the signature page of this registration
statement.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post- effective amendment shall be deemed a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
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<PAGE>
(4) For the purpose of determining any liability under the
Securities Act of 1933, each filing of an annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the small
business issuer in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer, or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of New York, State of New York, on the 5th day of
January 2001.
TAKE-TWO INTERACTIVE SOFTWARE, INC.
By: /s/ Ryan A. Brant
------------------------
Ryan A. Brant
Chief Executive Officer
Each person whose signature appears below hereby authorizes Ryan A.
Brant as his true and lawful attorney-in-fact with full power of substitution to
execute in the name and on behalf of such person, individually and in each
capacity stated below, and to file, any and all amendments to this Registration
Statement, including any and all post-effective amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Ryan A. Brant Chief Executive Officer and Director January 5, 2001
-------------------------------------- (Principal Executive Officer)
Ryan A. Brant
/s/ James H, David, Jr.
-------------------------------------- Chief Financial Officer January 5, 2001
James H. David, Jr. (Principal Financial and
Accounting Officer)
/s/ Barry Rutcofsky Co-Chairman and Director January 5, 2001
--------------------------------------
Barry Rutcofsky
/s/ Don Leeds Director January 5, 2001
--------------------------------------
Don Leeds
-------------------------------------- Director
Oliver R. Grace, Jr.
/s/ Robert Flug Director January 5, 2001
--------------------------------------
Robert Flug
</TABLE>
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