Dan O'Leary, CEO of n-Space, has posted a statement on his blog following layoffs at the company on Friday. His summary: "n-Space is down, but definitely not out."

The studio has not closed, and is currently operating with a core team while deals are being negotiated and concluded. Following this, he expects that he will be calling people back before the end of next week.

As the company has been supporting 70 to 90 employees for several months with no funding, the collapse of a licensing deal, together with no commitments from other publishers to offset this loss, led to the current state of affairs.

In his blog post, O'Leary details the difficulties of operating as an independent developer within the games industry, and also the economy in its current state. Despite shipping seven titles this year, few games are profitable outside of AAA titles or budget games, as anything in the "middle" is not selling in high numbers to consumers. He notes that the business environment for an independent developer is very difficult, with many concepts and proposals prepared through the year, some of which never resulted in a deal, as well as demos and even milestones prepared in good faith.

In August 2010, the company were forced to lay off 25 percent of their staff.