The prospect of consolidation of the video game software sector took another step forward Friday, as Acclaim Entertainment warned that it may soon wind up in bankruptcy after shares hit a 52-week low of 25 cents a few days ago. “Acclaim shares remain a speculative investment until management demonstrates its ability to execute on its strategy of making fewer, higher quality games,” Wedbush Morgan analyst Michael Pachter wrote Friday. “We believe that the company has a respectable lineup of games planned for release in [fiscal 2005] , but due to continuing cash flow problems, its ability to deliver these games on time remains in question.” In its annual report filed Thursday and in an earnings release on Friday, the game maker reported that it is in default on some of its convertible notes and at least three of its licensing agreements are in dispute, in part because Acclaim’s partners claim it hasn’t been paying royalties on time. While Acclaim negotiated a $30 million line of credit in May, it is facing a cash crunch. At the end of fiscal year on March 31, the company had just $1.1 million in cash, compared to $41.2 million in short-term debt.