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Interplay on the brink as debts mount

Fallout Online faces uncertain future as publisher struggles with $3 million deficit

Troubled publisher Interplay has warned that it may finally be overtaken by bankruptcy, as its latest financial report reveals a capital deficient of almost $3 million.

Interplay's new yearly report to the Securities and Exchange Commission (SEC), filed May 24, warns that the company is unable to meet its current obligations without additional income or by raising additional capital. If this cannot be achieved then the publisher risks becoming insolvent and/or being made bankrupt, illiquid or worthless.

As of December 31, 2010 the company's cash balance stood at just $3,000, with a working capital deficit of around $2.8 million. Interplay made a net loss of $1 million in 2010 and also owes the California Employment Development Department around $83,000 in payroll tax contributions and the Franchise Tax Board around $10,000.

In order to raise additional funds Interplay's primary options are listed as a sale or merger, a private placement or public offering of the company's capital stock, the sale of selected assets, the licensing of certain product rights in selected territories, and/or selected distribution agreements.

"These measures could include selling or consolidating certain operations or assets, and delaying, cancelling or further scaling back operations. These measures could materially and adversely affect our ability to publish successful titles, and may not be enough to permit us to operate profitability, or at all," reveals the filing.

Interplay, which is currently without a permanent chief financial officer, currently has five projects underway. However, the filing indicates that developers are not being paid in advance - only via a net-revenue-sharing model once the game is released.

The publisher's biggest project remains massively multiplayer online title Fallout Online. The filing also confirms production or pre-production of downloadable games based on its existing franchises Battlechess, Clayfighter, Dark Alliance, Descent, Earthworm Jim, MDK2 and Stonekeep.

"These conditions, combined with our historical operating losses and our deficits in stockholders' equity and working capital, raise substantial doubt about our ability to continue as a going concern," admits the filing.

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David Jenkins

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