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.



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 companyís Dexterís Laboratory game, based on the hit US cartoon show. The company is currently pursuing legal action against BAM!ís 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 Lemonís 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


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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