FEB. 16, 2010 • In a filing with the U.S. Securities and Exchange Commission, Southpeak Inter. revealed that its independent registered public accounting firm had reviewed the publisher’s consolidated balance sheet of Dec. 31, 2009 and concluded there was serious doubt whether Southpeak can continue as a going concern. Questions about adequate cash flow, substantial liabilities, and whether the publisher can renew its credit line were the primary reasons for the accounting firm’s conclusion.

Impact: Ever since the Oct. 2008 acquisition of Gamecock Media Group by Southpeak, there have been reports of the latter shorting payments to partners and vendors. Last December, Section 8 developer TimeGate sued Southpeak claiming withheld royalty payments, and challenging a Section 8 PS3 distribution agreement with 1C Company that TimeGate says Southpeak had no right to make. While Southpeak sees content from independent developers as a competitive advantage to the cost of AAA titles published by the likes of Activision Blizzard and Electronic Arts, it is now doubtful whether Southpeak is up to the challenge of effectively managing indie content.