Finnish mobile maker Jolla has fallen on hard times, just two years after the company debuted the first smartphone running Sailfish OS, an alternative operating system based on Nokia’s old MeeGo platform, whose inventors hoped would become the ‘third’ major mobile operating system.

Jolla’s Chairman and co-founder Antii Saarnio admitted last this weekend that the company had failed to close on an expected $10.6 million Series C funding round, and as a result it needs to restructure its debts. The company is therefore going to lay-off half of its workforce starting this December.

Saarnio revealed to TechCrunch that negotiations with a single investor over its Series C funding round had hit a roadblock, but added that talks will resume in December and that he’s hopeful the layoffs will only be “temporary”. Nonetheless, that’s put the company in a crunch, because it no longer has the cash on hand to keep paying the bills.

“We were negotiating for three months for financing round, and of course we are a startup which is dependent on the external financing. In the final moments this financing round was postponed, still with one month — and this caused us to be forced to make this action,” Saarnio told TechCrunch.

“We are of course hoping that these are temporary actions… And we are committed to continue the company but really this depends on the external investors as well, how are we able to continue operations,” he continued.

Saarnio had high hopes for Jolla and Sailfish when the company was first founded back in 2011. The company pitched Sailfish not only as an alternative to Google, but also as a way for smartphone makers to differentiate their consumer offerings thanks to its cool customization features.

Unfortunately for Jolla, the company failed miserably in its efforts to carve out a niche in a market that’s utterly dominated by Google and Apple. A quick look at its online ‘store’ reveals that there’s only one handset running the Sailfish OS that consumers can actually buy. As it stands today, Microsoft’s Windows Phone is the third most popular platform behind Android and iOS, but even with all of Redmond’s resources it commands a measly 1.7 percent market share. Alternatives like Jolla, Firefox OS, Ubuntu Phone and BlackBerry on the other hand, don’t even register.

Saarnio isn’t throwing in the towel just yet, but the omens don’t look good. Jolla’s chairman told TechCrunch that it’s “very important” the company closes on its funding round this December if it’s to keep going.

“The Sailfish OS requires quite a big investment and human resources… And that’s something we have difficulties to continue if we don’t have additional financing, it’s difficult to continue developing the operating system with these resources that we have at the moment.”

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