tinyBuild Inc on Tuesday said it had lowered its full-year revenue guidance due to ‘unusually weak trading’, and agreed to pay a $3.5 million settlement over an acquisition dispute.
Shares in tinyBuild plummeted 28% to 4.40 pence in London on Tuesday morning.
The Washington, US-based video game developer and publisher said that so far in the fourth quarter of 2023, trading has failed to meet expectations after an ‘unusually weak’ performance in October. tinyBuild added that it now expects full-year revenue to be between $40 million and $50 million.
As of November 30, tinyBuild said it had a cash balance of $5.7 million with no debt, and expects its cash position at the end of December to be below its previous target of $10 million to $20 million.
tinyBuild explained that ‘the market has deteriorated further’ and said that ‘certain large contracts’ may not be signed before the end of the year, if at all.
In response, tinyBuild has ‘promptly accelerated’ its cost reduction measures and is ‘exploring near-term options to strengthen the balance sheet’. Chief Executive Officer Alex Nichiporchik, meanwhile, has shown a ‘willingness’ to underwrite a future equity fundraise of up to $10 million.
Also on Tuesday, tinyBuild said it has agreed to pay a $3.5 million settlement to close its legal dispute with Steve Escalante, Lance James and Stall Proof LLC, the previous owners of Versus Evil LLC and Red Cerberus LLC.
tinyBuild acquired Versus Evil and Red Cerberus in November 2021. However, the claimants subsequently alleged that tinyBuild had ‘’breached three material obligations‘, including not providing Versus Evil with ’timely capital contributions‘ in the 2022 and 2023 financial years.
As part of the legal settlement, tinyBuild has agreed to pay the claimants $3.5 million in cash, in addition to legal costs. The payment will be divided into two tranches, the first comprising $1.5 million once the settlement terms are signed, followed by the remaining funds within 60 days. This deferred payment obligation has been secured by CEO Nichiporchik ’with a personal guarantee‘.
In its trading update, tinyBuild also said that Versus Evil so far ’continues to underperform‘, with three out of four games planned for release in the current half year now delayed into 2024.
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