Scotland-based development group VIS Entertainment has been forced to shut the doors of its studio on the Isle of Wight as a crisis over funding affects the company despite a recent move into profitability.
According to reports from ex-staff members, the doors of the Isle of Wight studios were locked yesterday, and all of the development staff there have been laid off - the first casualties of a funding crisis which threatens the future of the whole company.
VIS is facing a cashflow crisis, as despite posting a significant profit last year following the success of State of Emergency on the PS2, the company has had to pay back significant amounts to investors and now has insufficient cash to finish projects such as the currently unsigned State of Emergency 2.
It is thought to be in crisis talks with potential backers in an attempt to secure additional funding for the studio, with parties including venture capital groups 3i and Scottish Equity Partners, and investment company Hamilton Portfolio all named as potential partners in a report on Scotsman.com.
The news will come as a blow to development in the UK in general, but particularly in Scotland - where VIS is viewed as a major success story by investors following the success of State of Emergency, which sold some 1.1 million copies and is in line to be turned into a movie.
Earlier this year, VIS expanded its operations by purchasing the London-based studio of struggling publisher BAM! Entertainment.
VIS could not be contacted for comment at time of publishing.