It’s on their frontpage AND they sent out an email to the Official Fanclub members a few hours ago. In a nutshell, “We want to keep on making games, but we’ve run out of money.”
WTF? Che, littlewitch. :?
That’s what happens when you don’t release a title with twincest in it. 
twincest = love = money
Still… rather unexpected news. Guess that fancy artwork was really expensive…
I think Littlewitch would have stayed successful if they kept to the kind of titles that made them famous (Shirotsume Souwa and Quartett!)
In other words, kept FFD (Floating Frame Director) around, kept their games in the 8-10 hour length, kept making more use of cutins than CGs etc.
Diversifying out essentially made Littlewitch like any other eroge company, and their artist is not fast enough to compete with other eroge companies. They were best off in their niche.
I think the other thing Littlewitch needed to do was get another artist on board (not necessarily one with a similar style to Ooyari Ashito, but one that in combination with the stories and writing, would be able to create titles with a similar feel to their other eroges). Only releasing a title every 9 months or so is very risky for a non-top tier company, as one bad release would probably sink the brand, plus Littlewitch fans would probably still be willing to buy all their titles even if there were 2-3 new releases per year. (and as far as I understand, Littlewitch doesn’t have any sister brands? (excluding Littlewitch Velvet, and their only title was drawn by Ooyari Ashito anyway)).
By a weird coincidence, they are the only littlewitch games I bought (Shirotsume Souwa I bought twice, once on PC, once on DC for the seiyuu cast). Afterwards, I kept expecting other games in the same vein, but the following games all seemed to lack ‘something’. 
I guess their only option now is to open up to a wider audience and sign up with the Mangagamer… ~_~
that’s not good, I thought they were doing well