Although Interplay says it "adamantly disputes" claims that it's in breach of contract
with Bethesda regarding the Fallout
MMO, Gamasutra-viewed documentation on the company's finances makes it appear unlikely that the company can develop the title as promised.
Bethesda inked a trademark license agreement in 2004 that requires full-scale development -- including appropriate funding -- for the project to begin on April 4th.
But Interplay's SEC filing reveals it is actually approaching insolvency and may not be able to fund its operations -- making the full-scale development of an MMO a stiff proposition.
Interplay announced plans to develop a Fallout
MMO back in 2006, and said at the time
the game's budget would be $75 million.
In April 2007, Bethesda purchased the Fallout IP
from Interplay for $5.75 million, but even that windfall left the company with a $3 million debt load remaining. Interplay recently said it would try to revive
its Earthworm Jim
franchises in order to drum up funding for the Fallout
In its 2008 10k filed yesterday, however, Interplay says its cash balance as of December 31, 2008 was "approximately $0." Moreover, it's burdened with a working capital deficit of about $2.4 million, and the company says it may liquidate assets or pursue bankruptcy.
"We currently have some obligations that we are unable to meet without generating additional income or raising additional capital," says Interplay in the filing. "If we cannot generate additional income or raise additional capital in the near future, we may become insolvent and/or be made bankrupt and/or may become illiquid or worthless."
Even still, the company insists it has additional projects in development: "We currently have four new products in early stages of development. We have reinitiated our in-house game development studio, and have hired game developers for this purpose," says the filing.
Continuing operations is an option, says the company, but it would "incur material harm." Any measures it's forced to take as a response to its financial situation "could have a material adverse effect on our ability to continue as a going concern."
The company also notes that law in the state of Delaware, where Interplay is incorporated, requires that companies "operating in the vicinity of insolvency" must first repay their creditors before addressing the interests of stockholders.
"We may be required to preserve our assets to maximize the repayment of debts versus employing the assets to further grow our business and increase shareholder value," says Interplay.