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July 29, 2002: UPDATE
Red Lemon's Intellectual
Property Purchased
All 20 former employees of defunct games
developer Red Lemon have found jobs within the Scottish games sector, just over a month
after the company went into voluntary liquidation.
The good news comes as Dundee-based
developer Visual Sciences, set to release its first game since it bought up its Glasgow
counterpart's intellectual property (IP).
Farscape, the game of the sci-fi TV
series, is released in America next month on PC and could represent a turning point for
Visual Sciences. The company is best known for its collaboration with games giant
Electronic Arts (EA) on the racing car series of games, but is seeking to move into
other games genres. It acquired the IP rights from Red Lemon, which developed Far scape,
last month, and has reached agreement with its American publisher Simon & Schuster
Interactive to produce the sci-fi adventure game.
Red Lemon went into liquidation in June,
with problems in receiving payment from a major US client blamed . The six year-old
company specialised in games from TV and film franchises such as Braveheart, Aironauts
and Roswell Conspiracies.
Visual Sciences founder and managing
director Russell Kay said the Red Lemon deal enabled the company to position itself for
the emergence of the next generation of consoles -- PlayStation3, XBox 2 and Gamecube 2
- in a few years.
'We have been well known for the last four
years for the F1 games but we are now enlarging our portfolio so we are not wholly
reliant on one publisher,' he said. 'We are starting to think about what is happening in
two years' time . Size and scale are going to be everything in the games industry and
our portfolio has to be more diverse.'
Kay believes the fact that all of Red
Lemon's employees have already found jobs in the Scottish games sector, five with Visual
Sciences, demonstrates that the industry remains strong in Scotland.
'This shows the health of the industry in
that a company like Red Lemon can go under but everybody can be absorbed within the
industry ,' he added.
Visual Sciences was founded in 1993 and
employs 37 people at its office in Dundee. It reported a loss last year of just under £20,000
on a turnover of £1.2m. It hopes to release Far scape in Europe in the autumn, to
coincide with the screening of the fourth series on BBC2.
RED LEMON LIQUIDATION
fROM
"THE SCOTSMAN"
June
22, 2002:
Red
Lemon slides into voluntary liquidation
Andrew Murray-Watson
RED Lemon, one
of the brightest stars of the Scottish computer games industry,
has collapsed into voluntary liquidation after a major US client
allegedly failed to pay a debt to the company.
The Glasgow-based firm said that the downturn in the industry for
smaller games designers had also played its part in sending the
company to an early grave.
Red Lemon claims it suffered a cash crunch when BAM!
Entertainment, the US games publisher, failed to pay a six- figure
debt for the company’s Dexter’s Laboratory game, based on the
hit US cartoon show. The company is currently pursuing legal
action against BAM!’s UK subsidiary.
Kenny Craig, the head of insolvency at Tenon Scotland, will wind
down the company, which employs 20 people, and put its assets up
for sale.
Andy Campbell, a former Entrepreneur of the Year finalist, who
founded Red Lemon in 1996, confirmed that the liquidator had been
appointed.
He declined to comment on the current legal battle being waged
with Bam!, but said : "Unfortunately, my staff of 20 have
lost their jobs. But they are very talented people and, hopefully,
they will find other employment."
Campbell said he was currently mulling over a couple of offers
from other companies.
He said: "A few opportunities have already been presented to
me. I will spend some time taking stock of my options."
Red Lemon’s collapse comes six months after the firm undertook a
radical restructuring programme to strip £250,000 from its cost
base. That involved removing a layer of management and relocating
to cheaper office accommodation.
The cutbacks had showed signs of putting the company back on an
even keel, but the alleged refusal of BAM! to pay its debt proved
to be the final straw.
Craig said: "Red Lemon was a dynamic, creative and
entrepreneurial business that helped put Scotland on the global
games industry map. Unfortunately the company was severely
affected by a number of factors outwith its control and the
directors have made the difficult decision to place the business
in voluntary liquidation.
"Although the company will close, the main asset of the
business was its people and they will hopefully find alternative
employment quickly."
Red Lemon has received more than £1.5 million investment from
venture capital firms 3i and Scottish Equity Partners.
fROM
"The Glasgow herald"
Red
Lemon put into liquidation
June
21, 2002:
Client's
debt leaves sour taste at games developer
KRISTY
DORSEY
RED
Lemon is going into voluntary liquidation following the refusal of a
major client - believed to be publisher BAM! Entertainment - to pay
a six-figure debt owed to the Glasgow-based computer games
developer.
The
company will place a petition today with the Court of Session in
Edinburgh for the order. Tenon Scotland is expected to be appointed
liquidator to the company.
The
decision comes just six months after a major restructuring by Red
Lemon, which stripped £250,000 out of its running costs. This
involved taking out an entire layer of management staff, as well as
relocating to more modest office accommodation.
The
liquidation has put 20 people out of a job, and will leave Andy
Campbell, the co-founder and managing director, contemplating his
future. Campbell and two friends set the business up six years ago
with a £27,000 loan, and succeeded in building up annual revenues
to more than £1m.
However,
Red Lemon has struggled over the past couple of years as spending
cutbacks by games publishers have squeezed smaller developers who
rely on advance royalty fees to finance major projects. The
situation was exacerbated during the development lull that
accompanied last year's launch of a clutch of new game consoles,
prompting Red Lemon to cut back on its operating costs.
Campbell
had expected the restructuring to put the company on a sound
footing. However, the final straw came when Red Lemon proved unable
to collect on a six-figure debt owed by one major customer.
That
customer is believed to be BAM! Entertainment, the US games
publisher headquartered in San Jose, California. Last month, BAM!
reported a higher-than-expected loss of $6.2m (£4.2m) for the third
quarter of its financial year, citing a delay in new product
releases and slow games sales. Shares in the company, which went
public in November of last year, have been among the worst
performers this year among all publicly-traded games companies on
Nasdaq.
Red
Lemon is thought to be owed payments from development work on
Dexter's Laboratory, a PlayStation game developed for BAM! and based
on one of the Cartoon Network's most popular animated characters.
BAM! unveiled the game - one among its expanded line of Cartoon
Network titles - at the Electronic Entertainment Expo (E3) industry
conference in California last month.
Red
Lemon is said to have instructed solicitors to act on its behalf in
claiming the money it is owed. They will continue to pursue the debt
despite the liquidation, with any proceeds to be dealt with by the
liquidators.
Institutional
backers include venture capitalists Scottish Equity Partners and 3i,
while Bank of Scotland acted as Red Lemon's bankers and landlords.
Much
of the work undertaken by Red Lemon was in the field of licences
from television and cinema entertainment.
Other
titles include Braveheart, which was tied to the movie of the same
name starring Mel Gibson; Aironauts; and Roswell Conspiracies, which
is based on a popular children's television cartoon.
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