Online computer games company Gameplay is on its last legs following the collapse of last-ditch takeover talks.

Mark Strachan, Gameplay's chairman, said the group had appointed consultancy firm KPMG to advise on its solvency, and it had received no further takeover offers.

"The company has been in discussions regarding its future with a number of parties over the summer. Yesterday discussions with a third party for the purchase of the company were terminated, and the company is not currently in discussions with that or any other party," he said.

The only full-time employees at the group are the chief executive, Mark Bernstein, and the finance officer, Ted Bechman.

Gameplay has sold most of its assets over the past year and today reported full-year revenues of just £79,000, against consolidated turnover of £44.5m at the half-year mark.

Mr Strachan admitted the group could not afford to audit its subsidiaries, resulting in the disastrous revenue figures, which were accompanied by a full-year loss of £197.6m.

"The directors believe the costs the company would have incurred in auditing the many subsidiaries around Europe which the company no longer control, would be substantial, severely reducing the remaining shareholder funds, and would be of little benefit or interest to shareholders," he said.

Gameplay has been driven into the ground by a triple whammy of slow roll-out of next-generation games consoles, excessive expansion and a credit squeeze in the wake of the collapse of the dot.com boom.

The group was forced to hold a strategic review in May when the delayed launch of Sony's PlayStation 2 hit sales and strained a balance sheet already overstretched by a risky European expansion programme.

According to Mr Strachan, the announcement of a review damaged Gameplay's credibility in the eyes of customers and suppliers, forcing the sale of the group's money-spinning boxed games business.

The loss of a cash generating unit then forced the sale of other businesses, leaving Gameplay as a drastically reduced business.

Gameplay's investors included BSkyB and high street retailers Dixons, who have written off their investments.