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CEO loans $3 million to game maker 3DO

Struggling video game publisher 3DO reveals that it has borrowed $3 million from founder and CEO Trip Hawkins to stay afloat.

Struggling video game publisher 3DO revealed that it has borrowed $3 million from founder and CEO Trip Hawkins to stay afloat.

In a separate announcement on Monday, the company also lowered financial estimates for the remainder of its 2003 fiscal year.

Hawkins made the six-month loan, at 9.5 percent interest, last June to help 3DO secure an additional $15 million in credit from GE Capital, the company revealed in documents filed with the Securities and Exchange Commission. The credit line is expected to fund the company's operations through next year.

3DO said in the statement that it now expects revenue of $6.8 million to $7.4 million for the second quarter, which ended Sept. 30. Net income is projected to be a loss of $7 million to $8 million, or a split-adjusted 92 cents to $1.04 per share. Previous estimates called for revenue of about $9.5 million and a loss of $4 million.

Revenue for the third quarter, which ends Dec. 31, is now projected at $4 million to $5 million, down from previous estimates of $8 million to $9 million. Net loss is seen at $6 million to $7 million, compared with previous estimates of $2 million.

The company still expects to return to profitability in the fourth quarter, with revenue of $22 million to $25 million and net income of $1 million to $2 million.

3DO shareholders in August approved an eight-for-one reverse stock split, to help the company's shares stay above the $1-per-share minimum required to stay listed on the Nasdaq exchange. The company's shares closed at $1.43 Monday.

To date, 3DO has been best known for its series of Army Men children's games and High Heat baseball titles, but the company is pinning its comeback hopes on a trio of new brands.

"We have learned how to develop brands and use state-of-the-art technology with much more leverage," Hawkins said in the statement. "Plus, the hardware customer base will hit the takeoff point this Christmas, which will give us additional leverage from increased demands for gaming software."