Interplay Financials, Fallout Online in Doubt

Interplay’s most recent 10-K filing does not paint a rosy picture for the company, with one million in losses over 2010 and almost three million in working capital deficit and stockholder deficit. Naturally, this puts Fallout Online in doubt, and makes it more likely that Bethesda will win its lawsuit over Interplay by default.

We currently have some obligations that we are unable to meet without generating additional income or raising additional capital. 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.

As of December 31, 2010, our cash balance was approximately $3,000 and our working capital deficit totaled approximately $2,877,000 . If we do not receive sufficient financing or sufficient funds from our operations we may (i) liquidate assets, (ii) seek or be forced into bankruptcy and/or (iii) continue operations, but incur material harm to our business, operations or financial condition. These measures could have a material adverse effect on our ability to continue as a going concern. Additionally, because of our financial condition, our Board of Directors has a duty to our creditors that may conflict with the interests of our stockholders. When a Delaware corporation is operating in the vicinity of insolvency, the Delaware courts have imposed upon the corporation’s directors a fiduciary duty to the corporation’s creditors. Our Board of Directors may be required to make decisions to fulfill its fiduciary duty that favor the interests of creditors at the expense of our stockholders. For instance, 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. If we cannot generate enough income from our operations or are unable to locate additional funds through financing, we will not have sufficient resources to continue operations.

(…)

We may not be able to successfully develop a (Fallout) MMOG.

We plan to exploit the license that we hold to create a (Fallout) MMOG. We must satisfy various conditions to maintain our license. Although we believe that all such conditions have been met, our licensor Bethesda Softworks LLC filed a legal action attempting to terminate our license.

If we lose the pending litigation, our license to create a (Fallout)-branded MMOG may be terminated and we might not be able to successfully launch the game.