Interplay has filed their 10-Q report with the SEC. There are a few interesting things to take note of, if you can get past all the numbers. I'll save the "big news" for the bottom of the post. First up, Interplay comments on the legal proceedings with Bethesda:
On September 8, 2009 Bethesda Softworks LLC filed a Complaint for Declaratory Judgement, Preliminary Injunction and Other Relief against Interplay Entertainment Corp. in the United States District Court for the District of Maryland. On October 16, 2009, Interplay Entertainment Corp. ("Interplay") answered the lawsuit and asserted Counter-Claims against Bethesda, including for Breach of Contract, Declaratory Judgment, and other relief.
Bethesda seeks to cancel the April 4, 2007 trademark license agreement that conditionally allows Interplay to use the FALLOUT (R) brand in conjunction with its currently-in-production massively multiplayer online game. Bethesda claims that Interplay failed to commence full scale development and to satisfy a funding requirement within a specied time frame. Bethesda also seeks to terminate Interplay's rights with respect to the previously released FALLOUT (R), FALLOUT (R) 2, and FALLOUT(R) Tactics games. Interplay disputes these claims. Although the potential damages are currently unknown, if Bethesda ultimately prevails and cancels the trademark license agreement, Interplay could lose its license to use the FALLOUT(R) brand with respect to its massively multiplayer online game and/or its license to distribute the back catalog FALLOUT(R) titles and may owe monetary damages.
Interplay's counter-suit alleges that Bethesda interfered with Interplay's business, including distribution of the previously released FALLOUT (R), FALLOUT(R) 2, and FALLOUT(R) Tactics games, by attempting to terminate Interplay's distribution rights, among other acts. Interplay asks the Court to decide whether Bethesda's attempt to terminate Interplay's rights under the Asset Purchase Agreement results in nullification of the entire contract such that the Parties should be returned to the status quo under their former Exclusive Licensing Agreement. If the Exclusive Licensing Agreement is restored, Bethesda may owe royalties based upon sales of its FALLOUT (R) 3 title. Interplay also seeks a declaration from the Court that it has not infringed upon the FALLOUT(R) mark and that it has satisfied the terms of theTrademark Licensing Agreement related to Interplay's production of a massively-multiplayer online game. A hearing on Bethesda's Motion for Preliminary Injunction is currently set for December 11, 2009.
Also of interest is this bit about salaries, specifically Herve Caen's flagrantly large salary. Apparently, he wasn't actually paid this salary, but still:
The Company issued on October 2, 2006 to the following officer and directors Herve Caen, Eric Caen and Michel Welter conditional demand notes which have since become demand notes (due to the change in control resulting from Financial Planning and Development SA's acquisition of approximately 56% of the Company's outstanding stock) bearing a 5% annual interest rate. The demand notes were issued for the earned but unpaid directors' fees to Herve Caen for $50,000, to Eric Caen for $50,000, to Michel Welter for $85,000, and for earned but unpaid salary to Herve Caen in the amount of $500,000. A total of $483,000 in principal and interest remains outstanding under the demand notes and other loans received from officers and directors as of September 30, 2009. Interest accrued on the demand notes as of September 30, 2009 was $20,000.
Next, Interplay reveals that production of Project V13 has been underway since November 2007:
We have entered into a binding letter of intent with Masthead Studios to fund the development of a Massively Multiplayer Online Game (MMOG), code named "Project: V13." The game has been in design and development at Interplay since November 2007. Masthead and Interplay teams are working together under the direction and control of Interplay to complete development of the project. As a part of the agreement, the game utilizes Masthead's proprietary tools and MMOG technology developed for Masthead's MMO "Earthrise" project.
And the big news:
If we do not receive sufficient financing or income we may (i) liquidate assets, (ii) sell the company (iii) seek protection from our creditors including the filing of voluntary bankruptcy or being the subject of involuntary bankruptcy, and/or (iv) continue operations, but incur material harm to our business, operations or financial conditions. 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.
I really have no idea what the chances of Herve Caen selling the company are, or if it is just a formality to put that line in the filing, but it certainly is something to keep in mind.
If you really want, you can go to this page to read Interplay's whole filing. |