Imagi has auditors’ ‘concern’

Deloitte questioning co.'s financial resources

HONG KONG — Auditors delivered a “going concern” qualification to the half-year results of Hong Kong- and L.A.-based animation firm Imagi Intl., which last year delivered “Teenage Mutant Ninja Turtles” for Warner Bros and Weinstein Co.

Company statement said that Imagi is on course to deliver “Astro Boy,” with a voice cast headed by Freddy Highmore, Nicolas Cage and Bill Nighy, for release in October.

But audit firm Deloitte Touche Tohmatsu said “it is uncertain whether the group will have the necessary financial resources to complete” work on “Gatchaman,” “Tusker” and “Cat Tale.”

The audit revealed that the group had bank and cash balances of approximately HK$88.9 million ($11.5 million) on Sept. 30. Imagi expects to need approximately $66 million to complete its animation pictures and to meet daily operating expenses up to June 2010. Of that figure, some $45.6 million is required within 12 months, before revenue from the pics is generated.

“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 … we consider that there is a material uncertainty which may cast significant doubt on the group’s ability to operate as a going concern.”

Deloitte did not qualify the company’s 2007-08 annual report which it audited in July.

For the half year to September, company reported losses of $2.8 million compared with $3.5 million at the same time the previous year, on revenues down from $1.6 million to $200,000.

Imagi said that the most exciting sequences of “Astro Boy” will be in 3-D and that “Gatchaman and “Tusker” will be entirely in 3-D.

“Tusker,” an India-set elephant tale once set up at DreamWorks, is to be directed by Lorna Cook from a script by Ted Talley and produced by Brooke Breton.

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