Imagi Hits Rough Patch

This doesn't look real swell ...

... Auditors delivered a 'going concern' qualification to the half year results of Hong Kong- and LA-based animation firm Imagi Int'l which last year delivered "Teenage Mutant Ninja Turtles" for Warner Bros and Weinstein Co.

... [A]udit firm Deloitte Touche Tohmatsu said "it is uncertain whether the Group will have the necessary financial resources to complete these animated pictures."

"At 30 September 2008, the group had bank and cash balances of approximately HK$88.9 million ($11.5 million,) while it is expected to incur approximately HK$512 million ($66 million) cash outlay to complete its animation pictures and to meet its daily operating expenses in coming years up to June 2010 (of which approximately HK$353 million [$45.6 million] is required within the next 12 months) before revenue from the animation pictures is generated," Deloitte said.

"The directors are actively pursuing various funding sources to meet the group's cash flow requirements…. However, it is uncertain whether these fund raising exercises will be successful," Deloitte said. "Consequently, in the absence of evidence that the group will be successful in raising the necessary funding as and when it is required, we consider that there is a material uncertainty which may cast significant doubt on the group’s ability to operate as a going concern ..."

A short while ago, we received a communication from the company that there could be a short hiccup in cash flow, but not to worry. There were plenty of bucks overall and everything would be ducky in due course.

Based on this, maybe things are a tad more serious than that.

The company has several animated features in various stages of production, and a lot of money invested in them. It's going to be grim for the sizable staff working in Sherman Oaks (not to mention Hong Kong) if everything comes to a grinding halt.