decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books

Gear

Groklaw Gear

Click here to send an email to the editor of this weblog.


You won't find me on Facebook


Donate

Donate Paypal


No Legal Advice

The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

Here's Groklaw's comments policy.


What's New

STORIES
No new stories

COMMENTS last 48 hrs
No new comments


Sponsors

Hosting:
hosted by ibiblio

On servers donated to ibiblio by AMD.

Webmaster
What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings
Saturday, February 19 2005 @ 12:44 AM EST

Melanie Hollands has done the hard work of pulling together all the options facing SCO, including trying to stay listed, in an article for IT Manager's Journal, "What happens if SCO Group stock is de-listed on NASDAQ?"

"To become listed, and stay listed, a company must maintain certain standards. For details, see this NASDAQ site page and BristolDirect. On the NASDAQ, for example, companies must pay certain listing fees, have a minimum stockholder's equity, have a minimum number of shareholders, etc. This is understandable from the stock exchanges' point of view. Their reputation rests on the companies they allow to trade on the exchange. The exchanges therefore don't want just any company to be able to trade -- they only want the cream of the crop, the companies that have solid management and a good track record. Failure to meet these specifications set out by the exchange results in the de-listing of the stock. Some of the other factors that trigger the delisting process are a low bid price and low market capitalization. In the penny stock areas, the "fraudsters" flourish and stocks are manipulated; major exchanges don't want to be associated with this type of behavior, so they de-list the type of companies that engage in it."

It turns out that even if they are de-listed, they have some options and can still be traded in a kind of grade B way, on the Over-the-Counter (OTC) Bulletin Board (OTCBB) or on the Pink Sheets, which she explains. The real issue is, why couldn't they timely file?

"There has been chatter that the delinquency has to do with accounting treatment for stock options, and that it's possible (but this is just chatter – not confirmed) that SCO Group's auditors wouldn't sign off on the Form 10-K because of something to do with the stock options. Whatever the reasons SCO is delinquent, my instinct is that long-term this whole SCOX mess will get very, very, ugly, and many SCO people will be out of work. . . .

"The company said that the delinquency is related to accounting treatment for stock options. Recall on April 20, 2004, SCO Group filed a number of registration documents granting options to seven of its executives. The executives include the new CFO Bert Young, and the following members of the Board of Directors: Duff Thompson, Fred Skousen, Ralph Yarro, Darcy Mott, Daniel Campbell, and Edward Iacobucci.

"At the time, I thought the timing and the pricing of these options could have been a red flag -- but it also may not have been. The pricing of the April 20, 2004 options appeared, at the very least, to be favorable. Some industry chatter suggested the executives optioned themselves up in light of the stock's low levels. Some went so far as to suggest that they may have doing may have acted on "inside information" (as defined by the Securities and Exchange Act of 1934).

"In my opinion, the pricing of the options relative to SCOX price levels over the pervious 12 months was at the very least favorable. But since then, the stock fell under $3, so that's not quite so favorable. The stock option grant could also have been a red herring -- an attempt to send a positive signal to the market in order to try and drive the stock price up. And if you recall, that is, in fact, what happened for a while: the stock price moved back up to around $11. Such subtle forms of manipulation are not unheard of. The SCO executives were granted an 'option to buy' at $7.18. Although it's possible the April 20 grant was part of the compensation plan, those seven executives did get very favorable pricing on the options. The options price at $7.18 was either: 1) very, very lucky, or 2) potentially a red flag that executives were optioned up following a major stock dip."

She then goes into the best and the worst case scenarios. There is a new SCO financial fundamentals page, updated on February 17, 2005, by the way. Here's how things looked in 2001. But one thing Hollands writes struck a bell:

"Now, SCO Group has not, to the best of my knowledge, been delinquent in the past with filings. But that doesn't necessarily mean its past filings have been correct or that the auditors haven't been helping cook the books."

I thought it would be useful to go back through the Groklaw archives, and make a record of everything we've reported on those filings. It begins with this article from June of 2003 on SCO's quarterly SEC filing for the period ended April 30, 2003, that showed the company issued stock options to certain executives, a consultant, and members of the board, and to one SCOsource licensee, which I believe would be Sun Microsystems:

"During the six months ended April 30, 2003, the Company issued 218,000 shares of restricted stock to certain key employees and 150,000 shares of restricted common stock to members of the Company's board of directors. The restricted common stock issued to the board of directors was in lieu of cash compensation for their services to the Company during the 2003 fiscal year and the restrictions lapse at October 31, 2003. The restrictions on the restricted stock awards granted to key employees lapse over a period of 24 months. The fair value of the restricted stock awards granted of $549,000 was recorded as a component of deferred compensation and is amortized to stock-based compensation as the restrictions lapse or as the services are performed....

"During the six months ended April 30, 2003, the Company issued a ten-year option to acquire 100,000 shares of the Company's common stock at $1.52 per share to a consultant for services. The option vests as follows, (i) options to purchase 50,000 shares vest on a monthly basis over a 12-month period, and (ii) the remaining options to purchase 50,000 shares vest upon the achievement of certain milestones. The fair value of the options will be determined and recorded as expense in the periods the services are performed and the milestones are achieved. During the quarter ended April 30, 2003, the Company recorded $131,000 of expense related to this option. For the six months ended April 30, 2003, the Company recorded $186,000 of expense related to this option. . . .

"Warrant Agreement -- During the quarter ended April 30, 2003, the Company issued a warrant to a SCOsource licensee. The warrant allows the licensee to acquire 210,000 shares of the Company's common stock at an exercise price of $1.83 per share for a term of five years from the date of grant. Because the warrant was issued for no consideration to the SCOsource licensee, the Company has recorded the fair value of the warrant of $500,000, as determined using the Black-Scholes option-pricing model, as a warrant outstanding during the quarter ended April 30, 2003 and reduced license revenue accordingly. . . .

"Future sales of our common stock may negatively affect our stock price. Certain holders of our common stock have demand and piggyback registration rights obligating us to register their shares under the Securities Act for sale. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market, or the perception that such sales could occur. This also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. . . .

"Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes that the following disclosures, when read in conjunction with the audited annual financial statements and the notes thereto included in the Company's most recent annual report on Form 10-K, are adequate to make the information presented not misleading."

I also remembered an article Groklaw did on their April 24, 2003 Proxy Statement, which outlined compensation for executives and the board:

DIRECTOR COMPENSATION.

The Company's directors will receive $25,000 plus $5,000 per committee served on, for the 2003 fiscal year payable in restricted shares of the Company's common stock priced effective February 21, 2003. In addition, members will be reimbursed for expenses in connection with attendance at board and committee meetings. Directors also participate in the Company's 1999 Omnibus Stock Incentive Plan, which provides for the award of an option to acquire 45,000 shares on joining the board and an option to acquire 15,000 shares for each year the board member continues to serve once stockholder approval is obtained at the Company's Annual Meeting.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

It is the duty of the compensation committee to review and determine the salaries and bonuses of executive officers of the Company, including the Chief Executive Officer, and to establish the general compensation policies for such individuals. The compensation committee also has the sole and exclusive authority to make discretionary option grants to the Company's executive officers under the 1999 and the 2002 Omnibus Stock Incentive Plans.

The compensation committee believes that the compensation programs for the Company's executive officers should reflect the Company's performance and the value created for its stockholders. In addition, the compensation programs should support the short-term and long-term strategic goals and values of the Company and should reward individual contribution to the Company's success. The Company is engaged in a very competitive industry, and the Company's success depends upon its ability to attract and retain qualified executives through competitive compensation packages.

General Compensation Policy. The compensation committee's policy is to provide the Company's executive officers with compensation opportunities that are based upon their personal performance, the financial performance of the Company and their contribution to that performance and that are competitive enough to attract and retain highly skilled individuals. Each executive officer's compensation package is comprised of three elements: (i) base salary that is competitive with the market and reflects individual performance; (ii) quarterly performance awards tied to performance of agreed-upon corporate objectives, and certain financial performance metrics of the Company, including but not limited to consolidated revenue, gross margin, net operating income and net income; and (iii) long-term stock-based incentive awards designed to strengthen the mutuality of interests between the executive officers and its stockholders. As an officer's level of responsibility increases, a greater proportion of his or her total compensation will be tied to the Company's financial performance and stock price appreciation rather than base salary.

Factors. The principal factors that were taken into account in establishing each executive officer's compensation package for the 2002 fiscal year are described below. However, the compensation committee has reserved the ability to exercise its discretion in applying entirely different factors, such as different measures of financial performance, for future fiscal years.

Base Salary. The base salary levels for the executive officers were established for the 2002 fiscal year on the basis of the following factors: personal performance and experience, the estimated salary levels in effect for similar positions at a select group of companies within and outside the Company's industry with which the Company competes for executive talent, and internal comparability considerations. The compensation committee made its decision as to the appropriate market level of base salary for each executive officer on the basis of its understanding of the salary levels in effect for similar positions at those companies with which the Company competes for executive talent. Base salaries are reviewed on an annual basis, and adjustments will be made in accordance with the factors indicated above. During fiscal year 2002, all executive officers of the Company took salary reductions in an effort to continue to control costs and to move towards the Company's goal to achieve profitability during fiscal year 2003.

Quarterly Performance Awards. Each executive officer (other than the Chief Executive Officer whose quarterly performance awards are described below in CEO compensation) may also earn a quarterly performance award on the basis of: (i) performance of agreed upon objectives between the executive officer and the Chief Executive Officer prior to the start of each quarter; and (ii) achievement by the Company of certain financial goals as approved by the Board of Directors and executive management. Prior to the payment of any quarterly performance award, the achievement of the financials goals must be attained in any given quarter. During fiscal year 2002 no quarterly performance awards were paid.

Equity Incentives. Equity incentives to the executive officers were provided through stock option grants and restricted stock awards under the 1999 Omnibus Stock Incentive Plan. The grants and awards are designed to align the interests of each executive officer with those of the stockholders and provide each individual with a significant incentive to manage the Company from the perspective of an owner with an equity stake in the business. Each grant allows the individual to acquire shares of the Company's common stock at a fixed price per share (the market price of the grant date) over a specified period of time (up to 10 years). The shares subject to each option vest in installments over a 48-month period, contingent upon the executive officer's continued employment with the Company. Accordingly, the option will provide a return to the executive officer only if the executive officer remains employed by the Company during the applicable vesting period, and then only if the market price of the underlying shares appreciates over the option term. Restricted stock awards allow the individual to receive shares of the Company's common stock with restrictions lapsing over a 24-month period.

The number of shares subject to each option grant or restricted stock award will be set at a level intended to create a meaningful opportunity for stock ownership based on the officer's current position with the Company, the base salary associated with the position, the size of comparable awards made to individuals in similar positions within the industry, the individual's potential for increased responsibility and promotion over the option term, and the individual's personal performance in recent periods. The compensation committee will also take into account the executive officer's existing holdings of the Company's common stock and the number of vested and unvested options held by that individual in order to maintain an appropriate level of equity incentive. However, the compensation committee does not intend to adhere to any specific guidelines as to the relative option holdings of the Company's executive officers.

CEO Compensation. In setting the total compensation payable to the Company's Chief Executive Officer for the 2002 fiscal year, the compensation committee sought to make that compensation competitive, while at the same time assuring that a significant percentage of compensation was tied to the Company's performance. The compensation committee reviewed industry compensation surveys for chief executive officers of comparable software companies to determine an appropriate compensation level. During fiscal year 2002, the Company hired Darl McBride, a seasoned technology veteran, to succeed Ransom Love as the Company's Chief Executive Officer. During fiscal year 2002, the base salary for Darl McBride was $250,000, which was later reduced to $230,000 as a result of salary cuts in the Company. Mr. McBride was also eligible to receive a quarterly performance award for reaching financial targets. The primary goals established for Mr. McBride included the successful attainment of revenue, and net income targets as established in his offer letter. These targets have been set very aggressively and will allow for Mr. McBride to earn from 20% to 300% of his base salary as a quarterly performance award based on attainment. During fiscal year 2002, Mr. McBride did not receive any quarterly performance award payments.

In recognition of the leadership and guidance Mr. McBride brings to the Company, he was granted 600,000 options to purchase shares under the Company's 1999 Omnibus Stock Incentive Plan. Of the options granted to Mr. McBride, 400,000 options vest 25% after one year with the remaining 75% vesting at 1/36th per month thereafter, until fully vested. Of the remaining 200,000 stock options granted to Mr. McBride, 50,000 options will vest one year from the date of the Company's first profitable quarter (as long as that profitable quarter is before Q4 of fiscal year 2003) and the remaining 150,000 options will vest one year from the date the Company achieves four consecutive quarters of profitability (as long as the fourth quarter is before Q4 of fiscal year 2004).

Compliance With Internal Revenue Code Section 162(m). Section 162(m) of the Internal Revenue Code disallows a tax deduction to publicly-held companies for compensation paid to certain of their executive officers, to the extent that compensation exceeds $1 million per covered officer in any fiscal year. The limitation applies only to compensation which is not considered to be performance-based. Non-performance based compensation paid to the Company's executive officers for the 2002 fiscal year did not exceed the $1 million limit per officer, and the compensation committee does not anticipate that the non-performance based compensation to be paid to the Company's executive officers for fiscal year 2003 will exceed that limit. The Company's 1999, and if approved 2002, Omnibus Stock Incentive Plans have been structured so that any compensation deemed paid in connection with the exercise of option grants made under that plan with an exercise price equal to the fair market value of the options shares on the grant date will qualify as performance-based compensation which will not be subject to the $1 million limitation. Because it is unlikely that the cash compensation payable to any of the Company's executive officers in the foreseeable future will approach the $1 million limit, the compensation committee has decided at this time not to take any action to limit or restructure the elements of cash compensation payable to the Company's executive officers. The compensation committee will reconsider this decision should the individual cash compensation of any executive officer ever approach the $1 million level.

Then there was this article about changes to the corporate certificate of incorporation, filed with the SEC on July 7, 2003, but dated the 3rd of May, 2001, their Amended and Restated Certificate of Incorporation of Caldera International, Inc. Aside from trying to limit liability of the Board of Directors and any others it approved, it said this:

B. Removal of Directors. Notwithstanding any other provisions of this Certificate or the Bylaws of the Corporation, any director or the entire Board of Directors of the Corporation may be removed, at any time, but only for cause and only by the affirmative vote of the holders of not less than a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. Notwithstanding the foregoing, whenever the holders of any one or more series of preferred stock of the Corporation shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the preceding provisions of this ARTICLE V shall not apply with respect to the director or directors elected by such holders of Preferred Stock.

Then on July 8, 2003, they filed their Registration Statement on Form S-3 relating to "the public offering or distribution by selling stockholders of up to 305,274 shares of common stock, par value $0.001 per share, of The SCO Group, Inc.", which Groklaw recorded in this article, which also discusses piercing the corporate veil. This was the time 305,274 shares of Common Stock were offered for sale by Vultus, Inc., The Canopy Group, Inc., Angel Partners Inc., Michael Meservy, Bruce K. Grant Jr., Ty D. Mattingly and R. Kevin Bean.

"No due diligence review of our company has been done in connection with this offering.

"No securities broker-dealer or other person has been engaged to perform any due diligence or similar review of this offering or our company on behalf of the selling stockholders, persons who may purchase common stock in this offering, or any other person. Consequently, individual investors cannot rely on such a due diligence review having been performed in making a decision to invest in our common stock.

"Risks associated with the potential exercise of our options outstanding.

"As of July 1, 2003, we have issued and outstanding options to purchase up to 4,011,975 shares of common stock with exercise prices ranging from $0.66 to $59.00 per share. The existence of such rights to acquire Common Stock at fixed prices may prove a hindrance to our future equity and debt financing and the exercise of such rights will dilute the percentage ownership interest of our stockholders and may dilute the value of their ownership. The possible future sale of shares issuable on the exercise of outstanding options could adversely affect the prevailing market price for our common stock. Further, the holders of the outstanding rights may exercise them at a time when we would otherwise be able to obtain additional equity capital on terms more favorable to us.

"Potential for the issuance of additional common stock.

"We have an authorized capital of 45,000,000 shares of Common Stock, par value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per share. As of July 1, 2003, we have 13,334,886 shares of common stock and no shares of preferred stock issued and outstanding. Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares. Any such issuance will dilute the percentage ownership of shareholders and may dilute the book value of our common stock. . . .

"We will not receive any proceeds from the sale or distribution of the common stock by the selling stockholders. We anticipate that we will incur costs of approximately $20,000 in connection with the transactions described in this prospectus, including filing fees, transfer agent costs, printing costs, listing fees, and legal and accounting fees."

Then in August of 2003, Groklaw compiled a list of all insider trades from 2002 on. Remember when SCO commented on insider trading in an August 2003 press release?

"The SCO Group, Inc. (Nasdaq: SCOX) encourages its directors and executive officers to sell the stock held by them through plans designed to qualify for the protections provided by Rule 10b5-1 under the Securities Exchange Act of 1934.

"The 10b5-1 plans provide for future sales of stock, at predetermined times and in amounts and under conditions specified in the plans, without subsequent instructions from the participants. These plans have been adopted by the following individuals: Robert Bench, CFO; Jeff Hunsaker, Sr. VP Marketing; Reg Broughton, Sr. VP International Sales; and Michael Olson, VP Finance/Controller. These plans have been implemented primarily for the purpose of providing liquidity to the participants to meet sizable personal tax liabilities resulting from the vesting of restricted stock awards.

"During the three months ended July 31, 2003, individuals selling under approved 10b5-1 plans sold 88,000 shares of the Company's common stock. Two other executive officers sold 29,616 shares during the same three-month period in Company approved open trading windows. For the upcoming three-month period to end on October 31, 2003, the above-referenced executive officers may sell up to 141,000 shares of the Company's common stock under current 10b5-1 plans if the conditions of the various plans are met. No other directors or executive officers have implemented a 10b5-1 trading plan to sell shares of the Company's stock during the next three months.

"Our directors and executive officers beneficially hold approximately 6,005,000 shares and options to acquire an additional 2,016,000 shares."

Shortly after that, on August 15, 2003, we reported on the Bloomberg article, in which Darl McBride claimed that their stock sales plan was submitted in January of 2003 "months before legal action was contemplated."

"Chief Financial Officer Robert Bench began the selling by SCO insiders, four days after SCO filed the suit against IBM. Bench is selling to help pay a $150,000 tax bill, McBride said. Under the Sarbanes-Oxley law, companies are no longer able to loan executives money to pay taxes or other expenses.

"Bench submitted a sale plan in January, months before any legal action against IBM was contemplated, McBride said. His agreement called for the sales to begin on March 8. He planned to sell 5,000 shares a month for the next 12 months, according to the plan."

However, there is some circumstantial evidence in our report that certain legal steps were taken in January, including hiring Boies Schiller on January 22. Of course, SCO might claim that wasn't the point at which they were positive they would follow a litigation strategy. It was Maureen O'Gara who reported on January 10:

"A usually reliable source swears a SCO executive told him that SCO has hired the redoubtable David Boies, who prosecuted the Microsoft antitrust case for the Justice Department, to press infringement claims not against users but against the other Linux distributions."

On September 15, 2003, we reported on an article I found from 2002 that said this about how long it took to start thinking about taking steps to monetize IP:

"The then-Caldera legal team was appointed the task of coming up with a review of the history of Caldera's intellectual properties and their status. The review turned up a stack of license agreements that had gone uncollected for years. To date (remember, McBride has been on board as CEO for only a few weeks), Caldera has already come to agreements with holders of these old licenses that will generate $600,000 in recurring revenue.

"The intellectual property fishing expedition has provided The SCO Group with the legal due diligence to now lay claim to UNIX itself. According to Opinder Bawa, new Senior VP of Technology, 'we own the source to UNIX; it's that simple. If we own the source, we are entitled to collect the agreed license fees.'"

Next, we reported on SCO's quarterly report for the period ending July 31, 2003, which said this:

To approve an amendment to the 2002 Omnibus Stock Incentive Plan to provide for up to 1,500,000 shares of common stock to be subject to awards issued under the plan. This resolution was passed with 6,851,000 votes in favor, 196,000 votes against and 4,000 abstentions. 3. To approve an amendment to the 2000 Employee Stock Purchase Plan to provide for an additional 500,000 shares to be subject to awards issued under the plan. This resolution was passed with 6,877,000 votes in favor, 169,000 votes against and 4,000 abstentions.

This was the 10Q that reported the acquisition of Vultus and some investment issues with Vista.com, and it also discussed stock compensation:

Under the terms of an Asset Acquisition Agreement (the “Vultus Agreement”) dated June 6, 2003, the Company acquired substantially all of the assets of Vultus, Inc. (“Vultus”), a corporation engaged in the web services interface business, in exchange for the issuance of 167,590 shares of the Company’s common stock, of which The Canopy Group (“Canopy”), the Company’s principal stockholder, received 36,656 shares, and the assumption of approximately $215,000 in accrued liabilities of Vultus. In addition, the Company assumed the obligations of Vultus under two secured notes payable to Canopy totaling $1,073,000. In connection with the assumption of the notes payable to Canopy, Canopy agreed to accept the issuance of 137,684 shares of the Company’s common stock in full satisfaction of the obligations. Canopy was a stockholder and significant debt holder of Vultus. The Company extended employment offers to most of the former employees of Vultus. Vultus is expected to be an integral part of the Company’s web services strategy. . . .

The $8.06 per share value of the common stock issued was determined based on the average market price of the Company’s common stock for the two days before and the day of signing the Vultus Agreement.

The Company accounted for the acquisition of Vultus as a business combination in accordance with SFAS No. 141. SFAS No. 141 requires that the total purchase price, including direct fees and expenses, be allocated to the assets acquired based upon their respective fair values. No current assets or tangible assets of significant value were acquired. Based on the nature and status of the research and development projects at the date of acquisition, none of the purchase price has been allocated to in-process research and development. . . .

During the three and nine months ended July 31, 2003, the Company granted options to purchase 375,000 and 1,488,000 shares of common stock with average exercise prices of $8.53 and $3.58, respectively, per share. None of these stock options was granted at prices below the quoted market price on the date of grant. During the three and nine months ended July 31, 2003, 776,000 and 1,023,000 options to purchase shares of common stock were exercised with average exercise prices of $1.57 and $1.41 per share, respectively. As of July 31, 2003, there were 3,724,000 stock options outstanding with a weighted average exercise price of $2.82 per share.

Amortization of stock-based compensation was $235,000 and $631,000, during the three and nine months ended July 31, 2003, respectively. Amortization (benefit) of stock-based compensation was ($287,000) and $144,000, during the three and nine months ended July 31, 2002 respectively. The benefit of stock-based compensation for the three months ended July 31, 2002 resulted from the reversal of previously recorded stock-based compensation related to non-vested options forfeited by certain employees whose employment had been terminated.

During the three and nine months ended July 31, 2003, the Company issued 7,000 and 225,000 shares, respectively, of restricted stock to certain key employees. The restrictions on the restricted stock awards granted to key employees lapse over a period of 24 months. The fair value of the restricted stock awards granted for the three and nine months ended July 31, 2003, was $61,000 and $415,000, respectively. The fair value of the restricted stock awards was recorded as a component of deferred compensation and is amortized to stock-based compensation as the restrictions lapse.

During the quarter ended April 30, 2003, the Company’s board of directors approved a resolution to receive remaining amounts owed to them for services provided during the 2002 fiscal year in the form of stock awards. The Company issued 27,500 shares of common stock with a fair value of $36,000. The fair value of the stock was recorded as stock-based compensation for the nine months ended July 31, 2003. Additionally, the Company granted 150,000 shares of restricted common stock to members of the Company’s board of directors with a fair value of $195,000. The restricted common stock issued to the board of directors was in lieu of cash compensation for their services to the Company during the 2003 fiscal year and the restrictions lapse on October 31, 2003.

In December 2002, the Company issued a ten-year option to a consultant to acquire 100,000 shares of the Company’s common stock at $1.52 per share. The option vests as follows, (i) options to purchase 50,000 shares vest on a monthly basis over a 12-month period, and (ii) the remaining options to purchase 50,000 shares vest upon the achievement of certain milestones. The fair value of the options will be determined and recorded as expense in the periods the services are performed and the milestones are achieved. During the quarter ended July 31, 2003, the Company recorded $74,000 of expense related to this option. Assumptions used in the Black-Scholes option-pricing model to determine the fair value of the options vested during the quarter ended July 31, 2003 were the following: market value of common stock of $7.34 per share; risk-free interest rate of two percent; expected dividend yield of 0 percent; volatility of 232 percent; and expected exercise life of one year. For the nine months ended July 31, 2003, the Company recorded $260,000 of expense related to this option.

Warrant Agreement

During the quarter ended April 30, 2003, the Company issued a warrant to a SCOsource licensee. The warrant allows the licensee to acquire 210,000 shares of the Company’s common stock at an exercise price of $1.83 per share for a term of five years from the date of grant. Because the warrant was issued for no consideration to the SCOsource licensee, the Company has recorded the fair value of the warrant of $500,000, as determined using the Black-Scholes option-pricing model, as a warrant outstanding during the quarter ended April 30, 2003 and reduced license revenue accordingly. Assumptions used in the Black-Scholes option-pricing model to estimate fair value were the following: market value of common stock of $2.40 per share; risk-free interest rate of three percent; expected dividend yield of 0 percent; volatility of 236 percent; and term of five years.

During the quarter ended July 31, 2003, the Company issued a second warrant to the above mentioned SCOsource licensee in connection with payment of amounts owed to the Company under the initial license agreement. The warrant allows the licensee to acquire 12,500 shares of the Company’s common stock at an exercise price of $1.83 per share for a term of five years from the date of the agreement. Because the warrant was issued in connection with the advance payment, the Company has recorded the fair value of the warrant of $150,000, as determined using the Black-Scholes option-pricing model, as a warrant outstanding and reduced license revenue accordingly. Since the terms of the initial license agreement extended beyond the Company’s normal payment terms, the related revenue was not recognized until the payments became due. Assumptions used in the Black-Scholes option-pricing model to estimate the fair value were the following: market value of common stock of $12.52 per share; risk-free interest rate of two percent; expected dividend yield of 0 percent; volatility of 137 percent; and a term of five years.

Warrant Agreement with Consultant

During the quarter ended July 31, 2003, the Company issued a warrant to a consultant, as part of an agreement to assist the Company with its SCOsource licensing initiative. The warrant allows the consultant to acquire 25,000 shares of the Company’s common stock at an exercise price of $8.50 per share for a term of two years from the date of the agreement. The Company has recorded the fair value of the warrant of $94,000, as determined using the Black-Scholes option-pricing model, as a warrant outstanding and included this cost as a cost of SCOsource licensing revenue. Assumptions used in the Black-Scholes option-pricing model to estimate the fair value were the following: market value of common stock of $12.84 per share; risk-free interest rate of two percent; expected dividend yield of 0 percent; volatility of 143 percent; and a term of 2 years.

Warrant Agreement with Morgan Keegan

In August 2002, the Company entered into an agreement with Morgan Keegan & Company (“Morgan Keegan”) to act as an exclusive financial advisor to assist the Company in its analysis, consideration and if appropriate, execution of various financial and strategic alternatives including, but not limited to, securing additional equity and/or debt capital and potential strategic transactions including mergers, acquisitions and joint ventures.

In consideration for the services provided, the Company issued to Morgan Keegan a warrant to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.01 per share. Morgan Keegan was granted demand registration rights to have the Company use its best efforts to register the shares upon exercise of the warrant. The Company expensed the fair value of the warrant of $294,000, determined using the Black-Scholes option-pricing model. Assumptions used in the Black-Scholes option-pricing model were the following: market value of common stock of $1.47 per share; risk-free interest rate of three percent; expected dividend yield of 0 percent; volatility of 145 percent; and expected exercise life of three months. In January 2003, Morgan Keegan exercised the warrant.

In the event that the Company is successful in raising equity, it will owe a contingent fee to Morgan Keegan for six percent of the principal amount of the financing. If the Company is successful in raising mezzanine financing (convertible debt) and/or senior debt, it will owe a contingent fee to Morgan Keegan of three percent and one percent, respectively, of the amounts borrowed. In the event that the Company is successful in completing an acquisition, it will owe a contingent fee to Morgan Keegan for the greater of two percent of the transaction value or $250,000.

Employee Stock Purchase Plan

On November 30, 2002, employees participating in the Company’s employee stock purchase plan acquired 87,500 shares of the Company’s common stock at a price of $0.66 per share. On May 31, 2003, 258,000 shares of the Company’s common stock were acquired at prices between $0.66 and $1.38 per share.

At those rates, even a $3 price would mean a profit. There was another stock sale in September of 2003, again reported by Groklaw, again being sold by Angel Partners, Michael Meservy, Ty D. Mattingly, Bruce K. Grant, Jr., and R. Kevin Bean. The filing included this information about Angel Partners:

"Ralph J. Yarro III, and Darcy Mott, Canopy's Chief Executive Officer and Chief Financial Officer, respectively, are both members of our board of directors. Ralph J. Yarro III is also on the board of trustees of Angel Partners, a charitable organization."

In October, we reported SCO filed an Amendment to its S3 from September, and Dr Stupid did a handy comparison [PDF], so we could easily see the changes.

Next, in November, 2003, we reported on SCO filing an S3 that, with the BayStar/Royal Bank of Canada info, and the original plan to give Boies shares, in addition to cash, and it added this tidbit on SCO's indemnification of officers and the board:

"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 Securities Act and is, therefore, unenforceable.

The S3 also included this information:

"Our board of directors' right to authorize additional shares of preferred stock could adversely impact the rights of holders of our common stock.

"Our board of directors currently has the right, with respect to the 4,950,000 shares of our preferred stock not designated as Series A Convertible Preferred Stock, to authorize the issuance of one or more additional series of our preferred stock with such voting, dividend and other rights as our directors determine. The board of directors can designate new series of preferred stock without the approval of the holders of our common stock, subject to the approval rights of our holders of Series A Convertible Preferred Stock as described above. The rights of holders of our common stock may be adversely affected by the rights of any holders of additional shares of preferred stock that may be issued in the future, including without limitation further dilution of the equity ownership percentage of our holders of common stock and their voting power if we issue preferred stock with voting rights. Additionally, the issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock."

In January of 2004, SCO filed a 10K that included the Morgan Keegan letters and the Independent Contractor Agreement with S2 Strategic Consulting.

Then in February of 2004, another S3, filed February 11, which detailed more BayStar info, and we did a handy chart, tracking the changes in the "Certificate of Designation, Preferences and Rights" resulting from the exchange of "Series A convertible preferred stock" (attached as an exhibit to the 8-K filing with the SEC on Oct, 17th 2003) to "Series A-1 convertible preferred stock" (attached to the 8-K filing with the SEC on Feb, 9th 2004).

Here's the report on a Newsforge story that the SEC was possibly investigating SCO and possibly Microsoft's role as well. And here's when we reported on SCO's buyback. And then in March of 2004, we reported on the conversion, as noted in SCO's 10Q. We reported on Robert Bench's retirement and his replacement by Bert Young and Bench's stock history in April of 2004. In July of 2004, we provided details on SCO's buyback of stock, from their 10Q and their S3. That article included the following bio blurb on Ralph Yarro, found on Power Innovations:

"Ralph is the Chairman of the Board for the Canopy Group. He also serves as Chairman of the Board of Trustees of Angel Partners, a 501(c)3 support organization for the Church of Jesus Christ of Latter-Day Saints and a Trustee for the Noorda Family Trust, the Scenic View Center, and the Worth of a Soul Foundation. He is the Chairman of the Board of Directors of Altiris, AP Software, Caldera Systems, Center 7, Coresoft, and Helius. He sits on the Board of Directors for: the Canopy Group, 2NetFX, Arcanvs, Cogito, DataCrystal, Expressware, Global Prime, The Guy Store, HomePipeLine, Interworks, Lineo, MTI, ManageMyMoney, Nombas, Profit Pro, Recruit Search, Troll Tech and TugNut."

An Altiris SEC filing says Yarro and Mott resigned. The article mentioned the Vultus writeoff from the SCO 10Q:

"The Company recorded a loss on impairment of long-lived assets totaling $2,139,000, which related to an impairment on intangible assets of $973,000 and an impairment of goodwill of $1,166,000 for the three and six months ended April 30, 2004. The impairment related to goodwill and intangible assets acquired in connection with the acquisition of Vultus, Inc. ('Vultus') in June 2003. The Company concluded that an impairment-triggering event occurred during the three months ended April 30, 2004 as an impending partnership that would solidify the Vultus revenue and cash flow opportunities did not materialize. Additionally, the Company had a reduction in force that impacted the Company's ability to move the Vultus initiative forward on a stand-alone basis. Consequently, the Company has concluded that no significant future cash flows related to its Vultus assets would be realized. The Company performed an impairment analysis of its recorded goodwill related to the Vultus reporting unit in accordance with SFAS No. 142. Additionally, an impairment analysis of the intangible assets was performed in accordance with SFAS No. 144. As a result of these analyses, the Company wrote-down the carrying value of its goodwill related to the Vultus acquisition from $1,166,000 to $0 and wrote-down intangible assets related to its Vultus acquisition from $973,000 to $0."

The same article reported that Angel Partners is not required to file a report with the IRS, because its income is less than $25,000, according to GuideStarEZ. In July of 2004, we told you the Wall St. Journal said BayStar was being "scrutinized" by the SEC. The settlement with BayStar is here.

If you would like to review the stock prices for every day since March of 2003, here you go. Transcripts of teleconferences are here or search the Archives by keyword "transcript". The SCO Financials page has more resources. So there you are. You should be able to find anything you are looking for now.


  


What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings | 180 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Go Here
Authored by: Weeble on Saturday, February 19 2005 @ 12:54 AM EST
Nobody's perfekt.

---
You Never Know What You're Going to Learn--or Learn About--on Groklaw!

[ Reply to This | # ]

OT Here please
Authored by: fudisbad on Saturday, February 19 2005 @ 12:55 AM EST
For current events, legal filings and 10-Ks. Please make links clickable.

---
See my bio for copyright details re: this post.
This subliminal message has been brought to you by Microsoft.

[ Reply to This | # ]

Off-Topic, Links, and All That Jazz
Authored by: Weeble on Saturday, February 19 2005 @ 01:00 AM EST
Sample format for a link:

<a href="http://www.example.com">CLICK ME</a>

Include the full URL; leaving out the "http://" will cause the link to
not work properly.

Set post mode to "HTML Formatted".

Click on "Preview" and test your links before clicking on "Submit
Comment".

Another basic formatting tip;

Begin each paragraph with <p> and end the last one with </p> or else
they'll all end up as one paragraph.

Have fun!

---
You Never Know What You're Going to Learn--or Learn About--on Groklaw!

[ Reply to This | # ]

So it's SCOXE now...
Authored by: Anonymous on Saturday, February 19 2005 @ 01:56 AM EST
First of all, I'd like to say this: Die, SCOX (or SCOXE). Die.

The sooner that the SCO Group is an embrittled, forgotten corpse, the better. Perhaps my biggest wish, the thing that would restore some hope to me that our court system is not completely whacked, would be to see some of these petty criminals who wear 3 piece suits and spout press releases get some jail time, serious amounts of it, for the ridiculous, absurd acts of malicious intent that they have perpetuated since the beginning of the whole mess. I don't that is likely, though... This saddens me.

Anyway, I've been watching this fiaSCO from the start, and much of what I learned over the course of it came from this site (Thank you, PJ!) I must admit that my attention has waned somewhat in the past months, as it became apparent that there never was any evidence, that this was just indeed a house of cards and a mob of profiteering shills. Not that I really though there was evidence, but "innocent until proven guilty" and all that. I was looking forward to watching whatever "evidence" they did bring to court get ripped to shreds, thus exposing the fraud and the fraudsters.

So, after a night around the fire having a cold drink (or 3 :) ) with my brother after a steak dinner, I log onto the Yahoo site to see what happened to the stock today. Hey, SCOX isn't there! No surprise, to see that they are SCOXE now, after all the news yesterday. But, I have to ask this - what of the Yahoo SCOX message board? That place (although I understand that there were some serious differences between here and there, tho I never understood why, fully) did have some good info if you waded through the chaff. What has become of it? Will there be a SCOXE Message Board? Or do we have to use *more* of PJ's (iBiblios) bandwidth?

Maybe getting rid of the message board was part of the reason to allow a "E" listing? That's tin-foil-hatish, I know, but you have to wonder. They *couldn't* shut down or defame the Truth that get shown here, but by their inaction on the 10K, they sure shut that site down.

Just wondering.

Thank you for Groklaw, PJ. It has been, and I am sure will continue to be, wonderful. :)

[ Reply to This | # ]

The nasdaq and SEC
Authored by: bcomber on Saturday, February 19 2005 @ 02:31 AM EST
From the look of all of this info, the impression I get is that by taking IBM to
court, SCO wanted nothing more than a buyout. I think they have been cooking the
books since this started, and now for whatever reason, someone suddenly says
hey, this isn't going to work and we need to get our house in order.

Could it be orders from Mr. Mustard over at Canopy? Who knows. It does raise
some questions and I fear/hope that the SEC is going to be looking a lot harder
at them.

Mike

[ Reply to This | # ]

What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings
Authored by: Anonymous on Saturday, February 19 2005 @ 02:45 AM EST
I wonder if this has something to do with the recent changes in accounting
rules. You're required to expense stock options now.

Here's a bit of info on it:

http://www.usatoday.com/money/companies/regulation/2004-12-16-fasb-options_x.htm


I suspect KPMG wants SCO to expense stock options, and SCO doesn't, because it
makes their fiscal report look really bad.


[ Reply to This | # ]

You know that "pit bull" line?
Authored by: Anthem on Saturday, February 19 2005 @ 02:50 AM EST
Forget it. The person I wouldn't want across from me in a trial is PJ.

I bet you were a REALLY good paralegal, PJ.

[ Reply to This | # ]

So who got rich?
Authored by: junklight on Saturday, February 19 2005 @ 03:10 AM EST
If this is near the end game - who got rich? what was all this about?

or did they really think they where going to get a pay off from someone?

[ Reply to This | # ]

Where now for the IP claims?
Authored by: Anonymous on Saturday, February 19 2005 @ 03:29 AM EST
It appears on the face of it that SCOXE is finished. Their case is in shreds;
Judge Kimball has as much as said that he'll throw most of it out once discovery
is finished. Now it looks like they've been cooking their books, and will have
to admit that they're flat broke, at which point their creditors will come after
them like ravening wolves.

My concern is about the IP claims at the core of this, the belief that someone,
somewhere in the Canopy empire "owns UNIX". I see these claims, this
belief, almost like a malevolent demon, infecting SCO - who, believe it or not,
used to be Good Guys - and I wonder what will happen to them once SCO are gone.
And I recall that it was apparently Microsoft that, uh, 'encouraged' them to
believe that, and bankrolled them to pursue that belief in court.

So SCO believe, and have asserted, that they own UNIX, and all derivative works
to the end of eternity. When the liquidators come in, they'll sell that, uh,
belief, to the highest bidder. So, who's it going to be? Back to Novell, so
that it can be buried deep and never return to haunt them? IBM? Sun (aka
Microsoft)? Another Microsoft catspaw? Microsoft outright?

Roll up, roll up, make your predictions here.

I'm going all out on the conspiracy theory, that SCO's major corporate investors
are holding stock for Microsoft (directly or through more indirection) and at
some point Microsoft are going to turn around and say "Good heavens! We've
just realised that we've inadvertantly bought a majority holding in SCO, and
would you believe it, we own UNIX and therefore, we regret to say, Linux!"

When that happens, the game gets serious. And I'm thinking when, not if.

[ Reply to This | # ]

De-listing isn't permanent
Authored by: Anonymous on Saturday, February 19 2005 @ 03:29 AM EST
A small nit: delisting is not necessarily permanent. A
company that has been delisted from the Nasdaq can apply
to be relisted. Of course they have to meet the Nasdaq's
criteria.
http://www.nasdaq.com/about/FAQsHearings.stm

Theoretically SCO could arise from the ashes with new
management, and actually put out products. You know, like
for customers. OK stop laughing- it could happen. Same
odds as winning a lottery, but it's possible.

[ Reply to This | # ]

De-listing was removed from A-1 stock!
Authored by: Anonymous on Saturday, February 19 2005 @ 04:00 AM EST
According to the nice summary here, the A-1 stock agreement had de-listing redemtion clause removed from it. See VII. A. i. This was filed a little over a year ago. What did they *KNOW* back then? Hmm...

[ Reply to This | # ]

Challenging delisting
Authored by: fudisbad on Saturday, February 19 2005 @ 04:31 AM EST
A company can request a hearing (oral or written) within 7 days of getting a
delisting notice. SCO have requested a hearing, but we do not know whether it is
oral or written.

In an oral hearing, you send your lawyers over to Washington to argue that you
should stay on the Nasdaq, face to face with the delisting panel. They can ask
your lawyers questions about your company. An oral hearing brings a fee of
$5000, plus extras.

A written hearing is just submitting documents to the delisting panel to get
your point across. This will cost a flat fee of $4000, plus extras.

The panel can take a few weeks to decide whether your company stays on the
market. Decisions and transcripts are not made public but can be subpoenaed.
Total time: roughly 2 to 3 months.

You can then appeal that decision to the NLHRC. This will set you back another
$4000. This is a written hearing. The NLHRC are required to file the decision
with the SEC. It takes a few months for this process to be completed.

If you're not happy with that, appeal to the federal courts.

Overall, this whole process could take in excess of one year. So much for a
10-K.

Sources

http://www.nasdaq.com/about/FAQSAppeals.stm
http://www.nasdaq.com/about/FAQsHearings.stm

---
See my bio for copyright details re: this post.
This subliminal message has been brought to you by Microsoft.

[ Reply to This | # ]

angel has less the 25k income?
Authored by: jig on Saturday, February 19 2005 @ 06:06 AM EST

doesn't that seem strange that a noorda charity that is on various boards and
named as beneficiary of etc etc has less than $25K/year income?

huh.

[ Reply to This | # ]

What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings
Authored by: Anonymous on Saturday, February 19 2005 @ 09:17 AM EST

This is like watching a bad horror film. Everybody in the audiences is yelling at the stupid teenagers to not open that door. No, don't split up and investigate the strange noise in teams of two. Just call the cops and let them deal with it.

Any sensible audience member long ago would have told those involved in the fiaSCO to simply give it up. Don't investigate that strange code that sorta-maybe-kinda looks like your own code (if you tilt your head and squint right, all C code starts looking about the same anyways) because you'll end up dead. You've watched the fall of many of the actors in the losing side of the game. I feel bad for the grunt-level programmers and other bottom-rung jetsam & floatsam that may have been cut. The rest however, you feel seem to get what they deserve for their blunderheaded actions. The way PJ lays it out here is like watching it unfold in slow-motion.

I'm ready for the whole thing to be over. Everybody knows the nazgul will win in the end :)

-gumnos



[ Reply to This | # ]

  • SCO employees - Authored by: Anonymous on Sunday, February 20 2005 @ 04:39 AM EST
What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings
Authored by: blacklight on Saturday, February 19 2005 @ 09:27 AM EST
I don't expect that SCOG being delisted is a milestone that the SCOG management
team and SCOG's investors would very much care for. Nor would the news of SCOG's
delisting be considered a ringing endorsement of the wisdom and judgment of
those in IT who chose to keep using SCOG as a vendor. Even if the delisting is
temporary this time, indications are that it may not be temporary next time.

[ Reply to This | # ]

What effect does this have on the court case? If any?
Authored by: Anonymous on Saturday, February 19 2005 @ 09:44 AM EST
I haven't seen any discussion yet about the effect on the current court case.
Could this give SCO a reason to apply for another delay, while they put their house in order? Or will the courts treat them with greater contempt for failing to keep their house in order.
Would it give IBM cause to apply for the case to be dismissed again? On the grounds that if SCO are in financial difficulty they probably can't pay costs if they lose, and SCO have not offered a financial guarantee that they can pay in that event...

[ Reply to This | # ]

What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings
Authored by: Anonymous on Saturday, February 19 2005 @ 10:32 AM EST
Now that SCO are delisted, will it make it easier for Microsoft to
"invest" in them without drawing much attention?

[ Reply to This | # ]

will price drop if delisted?
Authored by: Anonymous on Saturday, February 19 2005 @ 10:46 AM EST

You have to admit, scox's price is amazingly resilient. Let's see . . . what has
happend since scox hit $2.76 in November:

- Darl announced that scox would only have $7MM in cash by Jan 31st, down from
$63MM a year earlier.

- Yet another CC with nothing but bad news, and worse news.

- Business continues to decline and gush red-ink. No "scosource"
money, or anything like that.

- Laughed out of court in Michigan.

- Harsh warnings by a federal judge.

- CEO and CFO of parent company fired and sued for fraud.

- Late filing of 10-K, causes scox to become scoxe.

And after all that, scoxe's share price is up 50%. At this rate, delisting
should send scox over $8/share.

[ Reply to This | # ]

Delisting
Authored by: tredman on Saturday, February 19 2005 @ 11:50 AM EST
This is kinda implied in earlier posts, but it's a question that still gnaws at
the back of my mind.

I really know absolutely nothing about the stock market. So somebody out there
with knowledge of the system, please explain this to me: What exactly is the
downside of being delisted for SCOXE? They must realize, in the grand scheme of
things, that they have little hope left for a (meaningful) cash infusion from
share purchases by investors. Not being publicly traded also means not being
publicly disclosed and scrutinized. And being delisted on NASDAQ doesn't change
their standing in court one iota.

The only thing I could think of is that delisting might attract unwanted
attention from the SEC, but that's far from certain.

So what am I missing? I can see the upside of delisting, but what is the
downside, and does it outweigh the good?

Tim

[ Reply to This | # ]

  • Delisting - Authored by: kberrien on Saturday, February 19 2005 @ 12:03 PM EST
  • Delisting - Authored by: Anonymous on Saturday, February 19 2005 @ 12:52 PM EST
  • Delisting - Authored by: Anonymous on Saturday, February 19 2005 @ 01:11 PM EST
    • Delisting - Authored by: Anonymous on Saturday, February 19 2005 @ 05:11 PM EST
  • Delisting - Authored by: Anonymous on Sunday, February 20 2005 @ 04:57 AM EST
Keeping em delisted or Going out in Styles
Authored by: Anonymous on Saturday, February 19 2005 @ 12:20 PM EST
I think there's an interesting side effect to the NASDAQ delisting that can be
used to good effect.





When the SEC had been sent the Styles letter a month ago, in my opinion given
manpower limitations, it would have most probably gone to their "slush
pile". But now something has changed SCOX has been delisted and a RED FLAG
is set up. If an employee of any regulatory agency now places this letter on the
slush pile, it may be his head if an investigation comes up. Here's a partial of
places that the letter may now be taken with a bit more respect


SEC
NASDAQ
IRS
UTAH'S IRS
UTAHS Business frauds unit
Microsoft antitrust invistagators
Polish Minister (hey it worked before!)


...any others?

[ Reply to This | # ]

  • Canada - Authored by: Anonymous on Saturday, February 19 2005 @ 02:59 PM EST
What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings
Authored by: Anonymous on Saturday, February 19 2005 @ 01:27 PM EST
Translation of SCO's recent actions: We're dying, watch us bleed.

[ Reply to This | # ]

Exit strategy
Authored by: Tufty on Saturday, February 19 2005 @ 01:46 PM EST
I have been wodering if Boise might be getting concerned over the possibilities
of his client's demise? He certainly would not want this to run into his own
pocket especially if it was starting to look like a lost cause. Would he have
been talking, privatly that is, to the Nazgul as to what form an exit strategy
might take?

Do any of our legal eagles have any thoughts?

---
_____________________
There has to be a rabbit down this rabbit hole somewhere!

[ Reply to This | # ]

What Happens if SCO is Permanently De-Listed? -- And a Little History of SCO Filings
Authored by: Anonymous on Saturday, February 19 2005 @ 08:11 PM EST
When this is all over, we should give Melanie Hollands an award for her
absolutely superb analyses.

[ Reply to This | # ]

What will Microsoft do if SCO is Permanently De-Listed?
Authored by: biteydog on Sunday, February 20 2005 @ 08:02 AM EST
MS will have bought SCO to carry on the FUD?

Oh, no, its simpler than that. The Microsoft crusade is
not simply against Linux, but against Unix. Gnu/Linux is
simply seen as the "best-of-breed Unix" (this is a quote -
see the "Halloween Papers"). After all, if Linux is
damaged, won't a lot of people just move to one of the
BSDs?

They will happily turn on SCO, and say something along the
lines of "Look - even the originators of nasty old Unix
have collapsed. Shows it's no good."

[ Reply to This | # ]

History of SCO ticker symbols
Authored by: Anonymous on Tuesday, February 22 2005 @ 12:05 AM EST
Downside, which I run, automatically tracks ticker symbol changes. SCO's record shows eight entries since 2001.

  • Downside first shows them as "Caldera Systems, Inc. - Common Stock" (CALD). They were in the NASDAQ National Market System, which essentially means that NASDAQ classified them as a "major company".
  • On 2001-05-07, they changed their name to "Caldera International Inc." (CALD).
  • On 2001-05-08, a comma was inserted, yielding "Caldera International, Inc." This lasted until 2002-09-12.
  • From 2002-03-15 to 2002-04-12, there was a ticker symbol CALDD, indicating a new issue for the same company. Did Caldera issue a second class of stock?
  • On 2002-09-13, the ticker symbol changes to SCOX, but the company name remained Caldera.
  • On 2003-02-06, SCOX was dropped from the NASDAQ National Market System (NMS) and moved to the Small Capitalization Market (SCM), reflecting their shrinking assets and income.
  • On 2003-05-21, the Caldera name disappears and the listing is now under "SCO Group (The)".
  • Finally, on 2005-12-19, the ticker symbol changes to SCOXE, because the company's SEC filings are not current.

If they're kicked down another notch, to the "pink sheets", the ticker symbol will change to "SCOX.PK". That's what "delisting" does. If they go bankrupt while still listed by the NASDAQ, it will change to "SCOXQ".

Trading volume declines substantially with each drop, as does liquidity.

[ Reply to This | # ]

Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )