TIDMTBLD
RNS Number : 6430V
tinyBuild, Inc.
05 December 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, TO OR FOR THE ACCOUNT OR BENEFIT OF US PERSONS, AS
DEFINED IN REGULATION S PROMULGATED UNDER THE US SECURITIES ACT OF
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PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 as it forms part of domestic
law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018, as amended (together, "MAR"). Upon the
publication of this announcement, this inside information is now
considered to be in the public domain.
5 December 2023
tinyBuild, Inc
("tinyBuild" or the "Company")
Trading Update and Litigation Settlement
Near-term options to strengthen the balance sheet under active
consideration
tinyBuild (AIM:TBLD), a premium video games publisher and
developer with global operations, provides an update on trading and
a litigation settlement.
Highlights
-- Current trading below expectations in Q4, after unusually
weak trading in October and FY23 revenues are now likely to be
between $40-50 million(1)
-- Versus Evil continues to underperform with the delay of three out of four games into 2024
-- Cash position of $5.7 million at the end of November, with no
debt, and expected to be below previous expectations of $10-20
million at end of December 2023
-- $3.5 million Global Settlement Agreement (in addition to
legal costs) in respect of claims made by the Founder of Versus
Evil
-- Accelerated cost action to re-align investments with expected revenues
-- Company is exploring near-term options to strengthen the
balance sheet. CEO and founder Alex Nichiporchik confirming support
for the Company and willingness to underwrite, subject to
shareholder approval, a future equity fundraise of up to $10
million
-- Company intends to offer shareholders and other investors the
opportunity to participate in any such potential equity fundraise
and will provide a further announcement as and when appropriate
Current Trading and Cost Action
Since the publication of the Company's interim results in
September 2023 (" 2023 Half Year Results") , the market has
deteriorated further and negotiations of certain large contracts
have extended into the final month of the year. These remain under
negotiation and may not be signed by year end, or at all. The
continued underperformance of Versus Evil which delayed into 2024
three out of four games originally planned for release in H2 2023,
including the widely anticipated Broken Roads, also weighed on
group performance. As a result, FY23 revenues are now likely to be
between $40-50 million(1) with the top end of this range dependent
on the aforementioned large contracts being signed and anticipated
December trading before the year end.
The mix of revenues remains tilted towards lower-margin
third-party games, which has a negative impact on gross profit
margin, when compared to FY22. In an effort to mitigate the impact
of lower expected cash inflows just before the end of the year, the
Company has promptly accelerated its cost reduction plan. Further
reduction of studio cash burn, the refocus on lower risk and higher
than expected return projects and the optimisation of the
publishing units are expected to contribute to a cash outflow
reduction by $5-10 million per annum, starting from FY24. One-off
severance charges and further impairments may be booked in FY 2023
as a result of further cost action.
Settlement Terms
On 4 December 2023, tinyBuild agreed to a binding summary of
terms relating to a global settlement agreement (the "Settlement
Terms") to be entered into with Steve Escalante, Lance James and
Stall Proof, LLC (the "Claimants") relating to the following claims
which have been made against tinyBuild following its acquisition of
Versus Evil LLC ("Versus Evil") and Red Cerberus LLC ("Red
Cerberus") in November 2021 (together, the "Claims"):
(a) MIPA Claim
As previously disclosed in tinyBuild's 2023 Half Year Results,
in November 2021, tinyBuild acquired Versus Evil and Red Cerberus
from the Claimants. The Claimants allege that tinyBuild breached
three material obligations under the relevant Membership Interest
Purchase Agreement (the "MIPA"). First, the Claimants allege that
tinyBuild was obligated and failed to make timely capital
contributions to Versus Evil during fiscal years 2022 and 2023.
Second, the Claimants allege that tinyBuild was obligated and
failed to release to the Claimants certain funds that were held
back under the terms of the MIPA. Third, the Claimants allege that
tinyBuild was obligated and failed to provide material support to
Versus Evil that was promised under the MIPA (together, the "MIPA
Claim").
(b) Escalante Claim
In connection with the aforementioned acquisitions, tinyBuild
entered into an employment agreement with Steve Escalante providing
for his employment as General Manager of Versus Evil and Red
Cerberus (the "Employment Agreement"). Among other things, the
Employment Agreement provided for a retention package worth $3
million in shares and options over three years. Mr. Escalante
commenced legal proceedings against tinyBuild and tinyBuild's
directors alleging that tinyBuild breached the Employment Agreement
by failing to pay him in a timely manner and sought to assert his
right to terminate the Employment Agreement.
As part of the Settlement Terms and in full and final settlement
of the Claims (including the MIPA Claim), tinyBuild has agreed to
pay to the Claimants $3.5 million in cash (in addition to legal
costs). The Settlement Terms cover the claims disclosed in the 2023
Half Year Results note on contingent liabilities and will also
relinquish the Company from any future obligation relating to
earnouts, which allows tinyBuild to consider all strategic options
for both Versus Evil and Red Cerberus.
The payment will be divided in two tranches: (i) $1.5 million on
signing of the Settlement Terms and (ii) the remaining funds due
within 60 days (the "Deferred Payment"). tinyBuild's obligation to
make the Deferred Payment has been secured by founder and CEO Alex
Nichiporchik with a personal guarantee, should tinyBuild fail to
satisfy its obligations under the Settlement Terms.
Cash position
At the end of November, the Company had $5.7 million of cash,
which is expected to decline further due to limited cash inflow
from October sales, one-off charges as part of the cost reduction
plan and underlying software development investments due in
December. As a result, the Company's cash position at the end of
the year is expected to be in the low single digit millions,
assuming no large contracts are signed before the year end and
including the $1.5 million upfront cash payment related to the
Settlement Terms. The undrawn revolving credit facility with Bank
of America originally set up to fund potential M&A activity was
terminated and the Company continues to have no debt or undrawn
facilities.
Including payments to be made pursuant to the Settlement Terms
and assuming no large contracts are signed, the Company will
require new funding by the end of January 2024. As a result of
this, the Company is evaluating near-term options to strengthen its
balance sheet. As part of this process, Alex Nichiporchik has
expressed his support for the Company and willingness to underwrite
an equity fundraise of new common shares of the Company to raise up
to $10 million. The Company intends to offer shareholders and other
investors the opportunity to participate in any such potential
equity fundraise under the same terms and will provide a further
announcement as and when appropriate. Any such equity fundraise
would require shareholder approval with further details expected to
be published before the end of 2023.
Whilst the Company is not subject to The City Code on Takeovers
and Mergers as the Company is incorporated in Delaware, any
subscription by Alex Nichiporchik that results in him holding more
than his current percentage holding will be subject to a
shareholder vote for him to purchase additional shares in order to
waive the requirement for him to make a mandatory offer for the
Company pursuant to the Company's bylaws. A subscription by Alex
Nichiporchik will also be classified as a related party transaction
pursuant to AIM Rule 13.
Outlook
The outlook for FY24 remains cautious. The Company expects
continued pressure on discounting in a crowded market for new
releases. The planned launch of certain promising games in 2024
gives reason for optimism and this coupled with a leaner cost base
could translate into strong operating leverage in the event of a
recovery in video games sales.
For the purposes of MAR, the person responsible for arranging
for the release of this announcement on behalf of the Company is
Giasone Salati.
Alex Nichiporchik, Chief Executive Officer of tinyBuild,
commented:
"2023 has been an incredibly challenging year. The whole team at
tinyBuild worked tirelessly to release our best products, despite
the impact of the war in Ukraine that deeply affected most of us.
We couldn't overcome weak demand for video games and the sudden
reversal of market dynamics that had favoured us over the previous
years. We innovated in marketing, refocused our catalogue, and
adjusted the cost base as quickly as possible, and, despite these
actions, it wasn't enough in such a rapidly evolving market.
"It's physically painful to part ways with colleagues after all
the good work they put into the Company. The only reason to justify
this decision is that the Company has entered a pivotal stage and I
am committed to do everything I can to ensure we get through this
tough period. We owe it to all our stakeholders now to bounce back
and deliver on what tinyBuild can achieve."
1. Source: Bloomberg consensus market expectations for revenue in FY23 = $49.9m.
Enquiries :
tinyBuild, Inc investorrelations@tinybuild.com
Alex Nichiporchik - Chief Executive Officer
Giasone (Jaz) Salati - Chief Financial
Officer
Michael Schauble - Chief Commercial Officer
Berenberg (Nominated Adviser and Sole
Broker)
Mark Whitmore, Ciaran Walsh, Milo Bonser +44 (0)20 3207 7800
SEC Newgate (Financial PR) tinybuild@secnewgate.co.uk
Robin Tozer, Harry Handyside, Molly Gretton +44 (0)7540 106366
About tinyBuild:
Founded in 2013, tinyBuild (AIM: TBLD) is a global video games
publisher and developer, with a catalogue of more than 80 premium
titles across different genres. tinyBuild's strategy is to focus on
its own intellectual property (IP) to build multi-game and
multimedia franchises, in partnership with developers.
tinyBuild is headquartered in the USA with operations stretching
across the Americas and Europe. The Group's broad geographical
footprint enables the Company to source high-potential IP, access
cost-effective development resources, and build a loyal customer
base through its innovative grassroots marketing.
tinyBuild was admitted to AIM, a market operated by the London
Stock Exchange, in March 2021.
For further information, visit: www.tinybuildinvestors.com .
Important Notices
The securities referred to herein have not been and will not be
registered under the US Securities Act or under the securities laws
of any state or other jurisdiction of the United States, and may
not be offered, sold, pledged or otherwise transferred in the
United States absent registration under the US Securities Act, or
pursuant to an available exemption from, or in a transaction not
subject to, the registration requirements of the US Securities Act
and applicable state securities law. The Company does not intend to
register the securities or conduct a public offering in the United
States. Any failure to comply with the foregoing restrictions may
constitute a violation of US securities laws. This announcement
(the "Announcement") does not constitute or form part of an offer
or invitation to sell or a solicitation of an offer to buy or
subscribe for or otherwise acquire any securities in any
jurisdiction or an inducement to engage in investment activity.
There shall be no offers or sales of shares or other securities in
any jurisdiction in which such offer or sale would be unlawful
prior to registration or qualification under the securities laws of
such jurisdiction.
This Announcement has been issued by the Company and is the sole
responsibility of the Company. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by
Berenberg or its affiliates or agents as to, or in relation to, the
accuracy or completeness of this Announcement or any other
information made available to or publicly available to any
interested party or its advisers, whether written, oral or in a
visual or electronic form, and howsoever transmitted or made
available, and any liability therefore is expressly disclaimed.
Joh. Berenberg, Gossler & Co. KG, London Branch
("Berenberg") is authorised and regulated by the German Federal
Financial Supervisory Authority and is authorised, and subject to
limited regulation by, the FCA in the United Kingdom. Berenberg is
acting exclusively for the Company and no one else in connection
with the contents of this Announcement and other matters described
in this Announcement and will not regard any other person as its
client in relation to the content of this Announcement and other
matters described in this Announcement and will not be responsible
to anyone other than the Company for providing the protections
afforded to its clients or for providing advice to any other person
in relation to the content of this Announcement or any other
matters referred to in this Announcement.
The distribution of this Announcement and the proposed equity
issuance in certain jurisdictions may be restricted by law. No
action has been taken by the Company or Berenberg that would permit
an offering of such shares or possession or distribution of this
Announcement or any other offering or publicity material relating
to such shares in any jurisdiction where action for that purpose is
required. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such jurisdiction.
Persons into whose possession this Announcement comes are required
by the Company and Berenberg to inform themselves about, and to
observe, such restrictions.
This Announcement contains forward-looking statements.
Forward-looking statements are not historical facts but are based
on certain assumptions of management regarding our present and
future business strategies and the environment in which we will
operate, which the Company believes to be reasonable but are
inherently uncertain, and describe the Company's future operations,
plans, strategies, objectives, goals and targets and expectations
and future developments in the markets. Forward-looking statements
typically use terms such as "believes", "projects", "anticipates",
"expects", "intends", "plans", "may", "will", "would", "could" or
"should" or similar terminology. Any forward-looking statements in
this Announcement are based on the Company's current expectations
and, by their nature, forward-looking statements are subject to a
number of risks and uncertainties, many of which are beyond the
Company's control, that could cause the Company's actual results
and performance to differ materially from any expected future
results or performance expressed or implied by any forward-looking
statements. As a result, you are cautioned not to place undue
reliance on such forward-looking statements. Past performance
should not be taken as an indication or guarantee of future
results, and no representation or warranty, express or implied, is
made regarding future performance. Some of the information is still
in draft form and will only be finalised, if legally verifiable, at
a later date. The Company undertakes no obligation to release the
results of any revisions to any forward-looking statements in this
Announcement that may occur due to any change in its expectations
or to reflect events or circumstances after the date of this
Announcement and the parties named above disclaim any such
obligation.
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END
TSTLZLLBXLLEFBL
(END) Dow Jones Newswires
December 05, 2023 02:00 ET (07:00 GMT)
Grafico Azioni Tinybuild (LSE:TBLD)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Tinybuild (LSE:TBLD)
Storico
Da Gen 2024 a Gen 2025
