News is traveling fast around the ‘net that Interplay (not, of course, the Interplay of old) is in big trouble. They’ve filed their annual report with the SEC, and it doesn’t look good.

The company has all of seven employees at the moment, four of them developers. Presumably, this quartet has been working on the Fallout MMOG. The prognosis for the game isn’t exactly positive, however. Consider this from the report (their caps, not mine):

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.

What has everyone buzzing, though, is the fact that Bethesda is unhappy, very unhappy, with progress (if there’s been any) on the Fallout game:

Interplay recently received notice that Bethesda Softworks, LLC (“Bethesda”) intends to terminate the trademark license agreement between Bethesda and Interplay which was entered into April 4, 2007 for the development of FALLOUT MMOG. Despite the fact that no formal action is currently pending, Bethesda claims that Interplay is in breach of the trademark license agreement for failure to commence fill scale development of same by April 4, 2009 and to secure certain funding for the MMOG. Interplay adamantly disputes these claims. Although the potential damages are currently unknown, if Bethesda ultimately prevails and cancels the trademark license agreement, Interplay would lose its license back of the “Fallout” MMOG and any damages resulting therefrom are unknown at this time.

So does this mean the Fallout online project is about to be canned? Hard to say. Certainly, things look a bit bleak, especially when Interplay admits “For the year ended December 31, 2008, our net loss was $493,000. As of December 31, 2008 we had an accumulated deficit of $2.4 million.”

On the other hand, formal proceedings haven’t begun. Bethesda has given what amounts to a warning. It’s entirely possible that Interplay, despite the poor numbers, may be able to get an extension or other agreement to keep the project.

So it all comes down to “wait and see”. But Interplay will have to do some really fancy footwork to retain the license. After all, they had two years to start this thing up, and they haven’t done very much so far.

Interplay 10K filing