Akaei  (AKI)

14/12/01 Prelims
Strong sales growth (albeit from a more or less standing start) was accompanied by a move into loss for Akaei. Turnover reached £0.8m in the year to 30/06 (2000: £0.1m) whilst the Company recorded a loss of £0.35m Vs a gain of £0.07m the previous year.
Sales came from the release of licensed product into the retail channel of which Echelon, a PC space combat game, fared best. The Company's original model was to license finished product but appears to have altered its focus towards niche product genres and externally generated product with the signing of football management licenses with Rangers and Celtic football clubs. The Company intends to sell these products direct into the clubs' fan bases rather than via retail and is indicative of the Company's intention (and more probably need) to take an ultra low-risk approach.

14/02/02 UK publishing deal signed
Akaei has signed the UK publishing rights to Earth 2150 - Lost Souls, a PC Real-time strategy title that is the third in a long-running PC series. The previous version managed 37,000 units (published by Mindscape) in the UK and was critically well received. Akaei plans to release Earth 2150 - Lost Souls in Autumn 02 (although the game was originally released in selected European territories in December 01) and should, assuming Akaei can secure shelf space, represent a useful source of revenue with Akaei likely to receive between £7-£14 per unit sold.

22/03/02 Interims announced

Unusually, the Company did not reveal either its balance sheet or cash flow in the interims so it is difficult to determine its exact financial health. Having raised £400k via a placing in February, one would hope that the Company would have sufficient working capital to launch the 8 products it has lined up for the rest of calendar 2002. Assuming that this is the case, Akaei should enjoy a better second half of the current year/first half of FY03. However, the Company remains small and although it is slowly forging the right direct relationships with the major retailers, it will need to also continue improving the quality of its product portfolio if it is to advance from its sub-scale publisher status.

15/08/02 & 13/09/02 loan capitalisation and share consolidation
Akaei, whose MD, Rod Cobain, resigned on the 12th August announced that it has initiated a capital restructuring to make the share price more marketable and allow the issue of new shares (the current share price is below the nominal share price and Companies are not allowed to issue new shares below its nominal price). Akaei intends to achieve this with a 100 for 1 share consolidation share consolidation and a subsequent subdivision of that share into a new ordinary share of 1p and a deferred share of 49p. The net effect is to theoretically raise the Company's share price 100 fold whilst allowing the Company to issue further new ordinary shares. Presumably, the deferred shares would be unlisted and have no voting rights and value or, less likely, would be bought back by the Company.
At the same time, Akaei revealed that an inter-company loan from parent company On-Line would be capitalised with the issue of 1.3m new shares. As a result of this debt to equity conversion, On-Line will end up with 85.8% and existing shareholders heavily diluted.
It is unclear what the strategic direction of Akaei now is and we will be ceasing coverage until this is clarified.

Copyright 2008 Games Investor Consulting Ltd. All rights reserved