ITEM 3. LEGAL PROCEEDINGS

The Company may be involved in various legal proceedings, claims, and litigation arising in the ordinary course of business, including disputes arising over the ownership of intellectual property rights and collection matters. In the opinion of management, the outcome of known routine claims will not have a material adverse effect on the Company's business, financial condition, or results of operations.

The litigation with Glutton Creeper was settled in April 2009.

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.