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updated 5/24/2012 6:56:26 PM ET 2012-05-24T22:56:26

Former Boston Red Sox pitcher Curt Schilling's faltering Rhode Island video game company laid off its entire staff Thursday.

An email sent by the 38 Studios company to workers and obtained by The Associated Press says they were notified of the "non-voluntary and non-disciplinary" layoffs on Thursday.

38 Studios moved from Massachusetts in 2010 after Rhode Island offered a $75 million loan guarantee officials said would bring hundreds of jobs and millions of dollars of tax revenue. The company was more than two weeks late this month on a $1.1 million payment to the state economic development agency. State officials said the company wasn't able to make its payroll.

Gov. Lincoln Chafee said the layoffs were an indication of the "grim times" facing the company and the state, which could be responsible for some of 38 Studios' debt should the company collapse.

The company had 300 employees in Providence, Chafee said. It also has an office in Maryland.

Attempts to reach Schilling and company executives on Thursday were unsuccessful.

Chafee opposed the loan guarantee deal in 2010 while he was running for governor but has since said he wants to find a way to help make 38 Studios successful without giving it additional taxpayer assistance. But he has acknowledged the state is "in deep."

Chafee spokeswoman Christine Hunsinger said Thursday state officials were trying to determine whether 38 Studios is incorporated out of state, making it ineligible for millions of dollars in tax incentives it has applied for.

WPRI-TV reported Wednesday that Schilling's company isn't incorporated in Rhode Island but in Delaware as a limited liability company. It must be incorporated in Rhode Island to be eligible for tax credits under an incentive program for film companies and video game studios.

38 Studios applied for $2.1 million in film tax credits last year and sought over $6 million more last week. Chafee wants to cap at $5 million the amount of tax credits available to any project.

Schilling also pitched for Baltimore, Houston, Philadelphia and Arizona.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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