RNS Number : 1253G
tinyBuild, Inc.
30 September 2024
 

30 September 2024

 

tinyBuild, Inc

 

("tinyBuild" or the "Group")

 

2024 Half Year Results

 

tinyBuild (AIM:TBLD), a premium video games publisher and developer with global operations, is pleased to announce its unaudited results for the six months ended 30 June 2024.

 

Financial highlights:

·      Revenue of $18.8m (H1 2023: $23.3m), 19% lower primarily due to a further drop in development service revenues and continued underperformance of Versus Evil (VE).

·      Adjusted EBITDA¹ loss of $1.9m (H1 2023: $1.2m loss), due to lower revenues and relatively stable development cost amortization.

·      Gross profit improved to $4.1m (H1 2023: $8.8m loss), due to lower impairment of development costs, while cost of sales remained broadly stable at 62% of revenues (H1 2023: 59%).

·      Cash flows from operating activities dropped to $2.0m (H1 2023: $6.6m), reflecting the flow through of lower revenues and the negative net working capital contribution.

·      Impairment of development costs $3.0m (H1 2023: $18.3m) due to lower revenue prospects for Broken Roads (VE title).

·      In January 2024, tinyBuild raised $12.3m ($11.4m net proceeds) from existing and new shareholders in a placing, subscription and open offer. Alex Nichiporchik (CEO) provided $9.7m in new funds, Atari $2m and other existing shareholders $0.6m.

·      Sale of Totally Reliable Delivery Service and Surgeon Simulation for an aggregate consideration of $3m (upfront net proceeds of $2.3m were received in H1 2024).

·      Net cash position of $9.2m as at 30 June 2024 (31 December 2023: $2.5m), after $8.7m investment in game development costs (H1 2023: $16.9m). Cash and cash equivalents remained higher than expected throughout the summer and it is anticipated to reduce towards the end of the year as the Company continues to invest in a disciplined manner in upcoming game releases.


1
Includes amortisation of Development costs. Excludes impairment of Development costs ($3.0m) and share-based compensation expenses (see note 6).

 

Operational highlights:

·      Contribution from own-IP (first and second party) titles increased to 78% of Gaming revenues2  (H1 2023: 65%), primarily due to stronger performance of second-party titles.

·      Back catalogue3 sales decreased slightly to 89% of Gaming revenue2 (H1 2023: 93%), due to a higher number of new titles launched in the first six months 2024 compared to 2023.

·      Release of new titles such as Lil' Guardsman, Tamarak Trail, Broken Roads and Astor: Blade of the Monolith, plus expansion of catalogue with the launch of Cartel Tycoon for consoles and Kill It With Fire 2 (early access).

·      The announcement trailer of Kingmakers collected tens of thousands views across all social networks in the first few weeks, making it one of the most successful announcements in the Group's history.

·      Among other titles already announced, Streets of Rogue 2, VOIN, FEROCIOUS, and SAND continue to track in line with expectations.


2
Excludes revenues from Development Services and Events

3 Includes titles released prior to the current fiscal year

 

Employee Benefit Trust:

·      The Employee Benefit Trust continued to purchase ordinary shares on the market from time to time and now holds a total of 3,937,587 ordinary shares as at 27 September 2024. The EBT was set up in 2022 for the benefit of current and future employees and will continue to act independently of the Group to satisfy potential future option exercises of vested options granted.

 

Post-Period End highlights:

·      Released new titles Train Valley World, Level Zero: Extraction, DUCKSIDE, Rawmen and Drill Core, plus downloadable content (DLC) launches for Not for Broadcast and Punch Club 2: Fast Forward, which is now also available on iOS.

·      New trailers for season 2 of the Hello Neighbor animated series, Welcome to Raven Brooks, were well received, with a release planned in the second half of the year.

 

Outlook

·      The pipeline for the remainder of 2024 and beyond is strong and includes a number of larger-budget (above $1m), high-potential games alongside continuous investment in the catalogue including updates, DLCs and platform launches.

·      The implication of the conflict in Ukraine and the evolving macroeconomic situation impose caution and vigilance in the medium and long term. In particular, tinyBuild continues to carefully assess the position of its staff, its exposure in terms of revenues and any other factor that may have an impact on the business.

·      All considered, the Board remains confident the Company is on track to deliver results in line with expectations.

 

Alex Nichiporchik, Chief Executive Officer of tinyBuild, commented:

"In the first half of 2024 we achieved significant milestones: over 3 million wishlists across the portfolio, of which over 1 million in June alone after our new dedicated event tinyBuild Connect. Overall, our playable demos accumulated over 10 million views on YouTube with a total of 1.8 million hours played across only three games. tinyBuild currently has 4 titles on the Steam Top200 Wishlist chart, 3 of which are in the Top 100."

 

"In a difficult environment, our strategy of investing cautiously in higher-budget games is showing good results: we are building a diversified portfolio of own-IP, which gives us the best upside with the minimum risk. Once again, I want to thank our exceptional people for their enthusiasm and dedication - we have achieved a lot so far and we can look to the future with cautious optimism."

 

Enquiries:

 

 

About tinyBuild:

Founded in 2013, tinyBuild (AIM: TBLD) is a leading premium AA-rated and indie video games publisher and developer. tinyBuild has a strong portfolio of over 80 titles and it strategically secures access to IP and partners with developers to establish a stable platform on which to build multi-game and multimedia franchises.

 

Headquartered in Bellevue, Washington, USA, the Group has key operations worldwide, with employees, contractors or partners in multiple locations across five continents. tinyBuild's geographic diversity enables it to source high-potential IP, cost-effective development resources and a loyal customer base through 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.

OPERATIONAL REVIEW

 

The first half of 2024 in the gaming industry was a spillover of game cancellations and studio closures that occurred in 2023. Funding that was abundant until recently and supported ever more ambitious projects, suddenly disappeared leaving many studios struggling. Looking forward, we all need to listen to gamers first and foremost, validating our decisions as often as possible with the help of demos and real data.

 

Over the past few years we have refocused on products that connect with audiences, on infinitely re-playable games centred around systems: the one-thousand hour game. Over the past few months, we have started seeing the benefits of this approach. Since the beginning of the 2024 we have generated over three million wishlists across the portfolio, of which over one million wishlists in June alone. Shortly after our first dedicated showcase in May (tinyBuild Connect) we had six titles on the Steam Top200 Wishlist chart, three of which in the Top 100: Streets of Rogue 2, Kingmakers, Level Zero: Extraction, DUCKSIDE, SAND and FEROCIOUS.

 

We are also leaner and more efficient, with a lower and more flexible cost base. Significant effort has gone into enhancing internal processes, improving visibility and maintaining ownership of each line of budget, from the bottom up. We are improving the quality and timeliness of our internal reporting while making it more timely, which gives everyone more time to act in a fast-evolving industry.

 

In the first half, back catalogue and own-IP titles contributed 89% and 78% of Gaming revenue, respectively, (H1 2023: 93% and 65%), broadly in line with the average of the past five years. The pipeline of new titles has been realigned to maximise the long-term revenue and profitability potential, while maintaining a well-diversified portfolio.

 

In an uncertain environment, the Board is pleased with the operational reorganisation achieved to date and it is confident the Group is progressing in line with expectations for the financial year 2024.

 

Current portfolio and pipeline

In the first half of 2024, the release schedule included titles mostly from Versus Evil, delayed from the previous year:

·      Lil' Gardsman (PC and consoles) - A deduction adventure. Lil, an unlikely 12-year-old hero, is tasked with deciding the fate of over 100 unique characters.

·      Tamarak Trail (PC and consoles) - A deck-building roguelike, with customisable dice as players battle through randomly generated trails.

·      Broken Roads (PC and consoles) - A narrative-driven RPG set in Australia with a very distinct look.

·      Astor: Blade of the Monolith (PC and consoles) - A fast-paced action RPG where players play as Astor, a young warrior determined to unveil the secrets behind his creators' unforeseen demise.

·      Kill It With Fire 2 (Early Access, PC only) - An interdimensional action comedy game about murdering spiders. As The Exterminator, players will travel across the multiverse.

 

After the end of the period, tinyBuild published:

·      Train Valley World - An engrossing transport tycoon inspired by the genre classics. Build and manage efficient railroads across the globe - solo or in multiplayer.

·      Level Zero: Extraction - Tactical extraction shooter meets immersive survival horror. Play as rival mercenaries fighting for loot, or as alien monsters hunting humans. Solo or in multiplayer.

·      Rawmen (EPIC launch) - A light-hearted, third person food fighter. Players will battle alongside or against their taste buds (2-8 players), pitting average cooks with a talent for hurling fiery feasts against one another.

·      Downloadable content (DLC) for Not for Broadcast and Punch Club 2: Fast Forward.

·      Drill Core - Manage a team of miners, carriers, and guards through hazardous missions to extract minerals and power the drill platform.

·      DUCKSIDE - A persistent world survival game with player versus player, player versus environment, crafting, base building where you play as a duck wearing funny hat while wielding dangerous weapons.

 

Looking at the rest of 2024 and beyond, the pipeline is looking strong:

·      Streets of Rogue 2 - an immersive role-playing game (RPG) sandbox set in a vast, randomly generated open world that gives you maximum freedom to fight, sneak, hack, farm, build, steal, or talk your way to power.

·      Kingmakers - Go back in time to a war-torn medieval era with a vast arsenal of modern weapons, change the course of history, and save the future in this epic action/strategy sandbox.

·      FEROCIOUS - a survival shooter in which you will discover a lost prehistoric world full of deadly creatures under the control of hostile forces.

·      SAND - A multiplayer sandbox shooter from the developers of Secret Neighbor.

 

Investing and innovating for growth

In a period of uncertainty in the industry, the Group continuously reviews the quantum and allocation of investments into new higher-budget and higher-potential titles, with lower-risk investment in catalogue expansion. Since before the IPO, tinyBuild's mantra has been to build a well-diversified portfolio of own-IP that can be scaled into cross-media franchises, and we remain loyal to that while maintaining strict discipline on our investments.

 

Our nimble and decentralised structure is capable of handling larger projects, delivering high-quality titles across platforms on time and on budget. Recent announcements like Kingmakers and DUCKSIDE are good examples of how our sophisticated marketing strategy can attract a large audience even for a brand-new franchise.

 

So far in 2024, our focus has been on cash generation and financial stability. The executive team has become even more selective about signing up new titles, while we continue to take advantage of opportunities created by an uncertain macroeconomic environment.  We closed two small IP disposals and we stepped away from any potential acquisitions. We continue to invest more directly in studios we already have a good working relationship with and in titles spawned from our internal studios.

 

People

In late 2023, we took the difficult decision to initiate a cost action plan that led to the closure of four studios and a reorganisation of our publishing teams. These changes were not made lightly, and we understand the impact they have had on our employees. As a result, the number of employees decreased to less than 400 in June 2024.

 

tinyBuild continues to support all its staff (employees and independent contractors) and their families affected by the war in Ukraine and it continues to carefully monitor the situation. Having helped staff move out of the riskiest areas, the Group remains focused on mental health and administrative support so they can settle in their preferred location across Europe.

 

Position and strategy

tinyBuild is well-positioned with a strong pipeline of new titles and a proven ability to attract, screen and market high-quality game franchises. Our balanced investment strategy aims at building a diversified portfolio of high-potential own-IP, and our multimedia franchise model allows us to extend the life of our IP, maximising our return on investment.

 

Our medium-term strategy is to expand our position as a leading global video games developer and publisher, focussing on IP ownership while creating long-term scalable franchises across multiple media formats. 2024 has seen significant progress towards that ambition, and I would like to thank all of our shareholders for their support.

 

Alex Nichiporchik

Chief Executive Officer

30 September 2024

 

FINANCIAL REVIEW

 

Results for the six months ended June 2024 were in line with expectations, and the Group closed two small IP disposals in the period to strengthen its financial position closing the period with $9.2m in cash and cash equivalents (no debt).

 

Revenue

In the six months to June 2024, tinyBuild revenues were $18.8m, a 19% decrease compared to the previous period (H1 2023: $23.3m), primarily attributable to the $3.8m drop in development services revenues and to continued underperformance of Versus Evil, only partly offset by tinyBuild core publishing label's retail sales. Excluding development services and events, revenues in the first half decreased 4% to $16.8m, highlighting the resilience of the portfolio. Back catalogue performed strongly in the first half, supported by over 80 titles and by well-established franchises such as Hello Neighbor, Graveyard Keeper, Potion Craft and Streets of Rogue. Revenue from events, primarily DevGAMM, were stable at $0.6m as the Group consolidated the new events in Central and Western Europe.

 



 

 

FINANCIAL REVIEW (continued)

 

Adjusted EBITDA and Operating Profit

Adjusted EBITDA is presented net of amortisation of development costs, excluding impairment of development costs, share-based compensation expenses, exceptional costs (e.g. legal costs related to M&A) and other operating income, giving a clear yet conservative picture of the business progression. Adjusted EBITDA was negative $1.9m ($1.2m loss in H1 of 2023), reflecting a significantly lower revenue base, stable amortisation of development costs ($4.5m in H1 2024 vs $5.0m in H1 2023), and a less favourable revenue mix (higher share of third- and second-party titles).

 

Operating profit for H1 2024 was negative $6.2m (H1 2023: $31.9m loss), after accounting for the $3.0m impairment of development costs (H1 2023: $18.3m). Excluding the impairment charges, a lower EBITDA is offset by a $0.8m gain on disposal and by lower general and administrative expenses ($11.1m in H1 2024 compared with $13.6m in H1 2023).

 

Finance costs and taxation

As the Group carries no debt, finance costs were immaterial in H1 2024. Taxation charges were $0.3m (H1 2023: $6.4m credit).

 

Impairment

In H1 2024, tinyBuild incurred $3.0m charges relating to the impairment of development costs ($18.3m in H1 2023) and no charges relating to M&A-related intangibles ($6.1m and $2.7m relating to goodwill and other intangibles in H1 2023 respectively). These non-cash charges reflect the adjustment of expectations for future revenues of Broken Roads following a disappointing launch in April 2024.

 

Cash Flow

Cash flows from operating activities were $2.0m ($6.6m in H1 2023), including a $1.4m decrease in net working capital (H1 2023: $4.2m increase). Software development costs, mainly consisting of developer salaries, advances, localisation and porting, decreased 48% to $8.7m ($16.9m in H1 2023), reflecting the rationalisation in investment for upcoming pipeline releases carried out towards the end of 2023.

 

In January 2024, tinyBuild raised $12.3m ($11.4m net proceeds) from existing and new shareholders in a placing, subscription and open offer. Alex Nichiporchik (CEO) provided $9.7m in new funds, Atari $2.0m and other existing shareholders $0.6m.

 

Employee incentive plan and EBT update

 

The Employee Benefit Trust continued to purchase ordinary shares on the market from time to time and now holds a total of 3,937,587 ordinary shares as at 27 September 2024. The EBT was set up in 2022 for the benefit of current and future employees and will continue to act independently of the Company to satisfy potential share awards, restricted stock units and future option exercises, once vested.

 

As previously announced, the Remuneration Committee of tinyBuild intends to utilise share awards to incentivise and retain key employees and executive directors and further announcements are expected to be made in the future. The share awards not only encourage share ownership and stakeholder alignment in the business but also serves to preserve cash resources that would otherwise be used by the Company to satisfy bonus awards.

 

Financial Position

The net cash position at the end of June 2024 was $9.2m ($2.5m at the end of December 2023), with the majority of the variation driven by the $11.4m net proceeds from the capital raise closed in January. tinyBuild has zero debt.

 

Giasone (Jaz) Salati

Chief Financial Officer

30 September 2024



 

TINYBUILD INC.

 

UNAUDITED INTERIM RESULTS

 

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024

 



 

TINYBUILD INC.                                                                                              

 

CONSOLIDATED CONDENSED INCOME STATEMENT

 

 

 

 

    

Note

6 months ended 30 June 2024

 

6 months ended 30 June 2023

 

Year ended 31 December 2023

 

 

Unaudited

Unaudited

Audited

 

 

$'000

$'000

$'000

    

    

 

 

 

Revenue

3    

18,835

23,295

         44,663

Cost of sales:

    



       

 - Cost of sales


(11,692)

(13,832)

(30,980)

 - Impairment of development costs

7

(3,028)

(18,288)

(36,206)



                  

                  

                  

Total cost of sales

    

(14,720)

(32,120)

(67,186)


    

                  

                  

                  

Gross profit/(loss)

    

4,115

(8,825)

        (22,523)


    




Administrative expenses:

    




 - General administrative expenses

    

 (11,092)

(13,561)

 (26,090)

 - Impairment of intangible assets

7

-

(8,908)

 (11,849)

 - Share-based payment expenses


 (102)

(367)

 (414)

 - Non-recurring costs

    

 -

(281)

 (3,500)



                  

                  

                  

Total administrative expenses


(11,194)

(23,117)

 (41,853)



                  

                  

                  






Gain on disposal of intangible assets


773

-

-

Other operating income

    

137

-

619



                  

                  

                  

Operating loss


(6,169)

(31,942)

 (63,757)

    





Finance costs


 (62)

(16)

 (128)

Finance income


68

261

391

    


                  

                  

                                

Loss before tax


 (6,163)

(31,697)

 (63,494)

    





Income tax (expense)/credit 


(323)

6,414

649

    

    

                  

                  

                  

Loss for the period

    

(6,486)

(25,283)

(62,845)


    

                  

                  

                  






Attributable to:





Owners of the parent company


 (6,581)

(25,523)

 (62,537)

Non-controlling interests


95

240

 (308)



                  

                  

                  



 (6,486)

(25,283)

 (62,845)



                  

                  

                  





    

Basic and diluted loss per share ($)

5

          (0.018)

(0.126)

 (0.307)

Adjusted EBITDA*

6

 (1,888)

(1,249)

 (7,113)

 

*Adjusted EBITDA is a non-IFRS measure and is defined as earnings after capitalised software development costs, but before interest, tax, depreciation, amortisation, share-based payments expenses, impairment and other significant one-off other income or expense items.



TINYBUILD INC.                                                                                              

 

CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

6 months ended 30 June 2024

 

6 months ended 30 June 2023

 

Year ended 31 December 2023

 

Unaudited

Unaudited

Audited

 

$'000

$'000

$'000

    

 

 

 

Loss for the period

(6,486)

(25,283)

(62,845)





Other comprehensive income/(loss) net of taxation




Exchange differences on translation of foreign operations - items that may be reclassified to profit and loss

(57)

94

(24)

 

                  

                  

                  

Total comprehensive loss for the period

(6,543)

(25,189)

(62,869)

 

                  

                  

                  





Attributable to:



    

Owners of the parent company

 (6,638)

(25,429)

 (62,561)

Non-controlling interests

95

240

 (308)

 

                  

                  

                  

 

 (6,543)

(25,189)

 (62,869)

 

                  

                  

                  

 



    

 



 

TINYBUILD INC.                                                                                              

 

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

 

 

 

 

30 June

2024

31 December 2023

 

 

Unaudited

Audited

ASSETS

Note

$'000

$'000

Non-current assets




Intangible assets

7

             49,416

             51,512

Property, plant and equipment:




    - owned assets


                   443

                  661

    - right-of-use assets


                   516

                  374

Other receivables


                   383

                  385



                 

                 

Total non-current assets


             50,758

             52,932

 

Current assets




Trade and other receivables


               9,978

             13,666

Cash and cash equivalents


               9,202

               2,500



                 

                 

Total current assets


             19,180

             16,166



                 

                 

TOTAL ASSETS


             69,938

             69,098



                 

                 

EQUITY AND LIABILITIES

Equity




Share capital

8

              397

                  204

Share premium


         76,810

             65,593

Own shares


          (1,100)

              (1,031)

Warrant reserve


           1,920

               1,920

Translation reserve


              (74)

                   (17)

Retained earnings


        (24,692)

            (18,213)



                 

                 

Equity attributable to owners of the parent company


         53,261

             48,456

Non-controlling interest


                 (256)

                 (351)



                 

                 

Total equity


             53,005

             48,105



                 

                 

LIABILITIES




Non-current liabilities




Lease liabilities


329

146

Deferred tax liabilities


455

388



                 

                 

Total non-current liabilities


784

534



                 

                 

Current liabilities




Trade and other payables


15,964

             20,227

Lease liabilities


185

232



                 

                 

Total current liabilities


16,149

20,459



                 

                 

Total liabilities


16,933

20,993



                 

                 

TOTAL EQUITY AND LIABILITIES


69,938

69,098

 


                 

                 

 




TINYBUILD INC.                                                                                              

 

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

Share capital

Share premium

Own shares

Warrant reserve

Translation reserve

Retained

earnings

Total equity attributable to owners of the parent

Non-controlling interest

Total

 equity

 

Note

 $'000

 $'000

 $'000

 $'000

 $'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2024

 

204

65,593

 (1,031)

1,920

 (17)

 (18,213)

           48,456

          (351)

48,105

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) for the period

 

-  

                -  

-  

-  

              -  

 (6,581)

 (6,581)

             95

 (6,486)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:











Foreign exchange differences on translation of foreign operations


-  

                -  

-  

-  

 (57)

                  -  

                 (57)

              -  

                  (57)

 


           

           

           

           

                  

                  

                  

                  

                  

Total comprehensive loss for the period


-  

-  

-  

-  

 (57)

 (6,581)

 (6,638)

                  95

 (6,543)

 











Transactions with owners in their capacity as owners:











Issue of shares, net of transaction costs

8

193

11,217

-  

-  

              -  

-  

11,410

              -  

11,410

Share-based payments


-  

                -  

-  

-  

              -  

102

102

              -  

102

Own shares acquired


-

-

(69)

-

-

-

(69)

-

(69)

 

 

           

           

           

           

                  

                  

                  

                  

                  

Total transactions with owners

 

193

11,217

(69)  

-  

              -  

102

11,443

              -  

11,443


 

           

           

           

           

                  

                  

                  

                  

                  

Balance at 30 June 2024

 

397

76,810

 (1,100)

1,920

 (74)

 (24,692)

           53,261

          (256)

53,005

 


           

           

           

           

           

             

               

             

             



 

TINYBUILD INC.                                                                                              

 

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY (CONTINUED)

 

 

 

 

 

Share capital

Share premium

Warrant reserve

Translation reserve

Retained

earnings

Total equity attributable to owners of the parent

Non-controlling interest

Total

 equity

 

Note

 $'000

 $'000

 $'000

 $'000

$'000

$'000

$'000

$'000

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2023

 

204

65,593

1,920

7

43,910

111,634

(43)

111,591

 

 

 

 

 

 

 

 

 

 

Income/(loss) for the period

 

-

-

-

-

(25,523)

(25,523)

240

(25,283)

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:










Foreign exchange differences on translation of foreign operations


-

-

-

94

-

94

-

94

 


           

           

           

           

             

              

             

             

Total comprehensive loss for the period


-

-

-

94

(25,523)

(25,429)

240

(25,189)

 










Transactions with owners in their capacity as owners:










Issue of shares, net of transaction costs

8

-

-

-

-

-

-

-

-

Share-based payments


-

-

-

-

367

367

-

367

 

 

           

           

           

           

             

              

             

             

Total transactions with owners

 

-

-

-

-

367

367

-

367


 

           

           

           

           

             

              

             

             

Balance at 30 June 2023

 

204

65,593

1,920

101

18,754

86,572

197

86,769

 


           

           

           

           

             

               

             

             

 


TINYBUILD INC.                                                                                              

 

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

 

 

 

 

6 months ended 30 June 2024

6 months ended 30 June 2023

Year ended 31 December 2023

 

 

Unaudited

Unaudited

Audited

 

Note

$'000

$'000

$'000

Cash flows from operating activities





Cash generated from operations

9

1,987

6,289

10,617

Interest received


6

261

262

 


                  

                  

                  

Net cash generated from operating activities

 

1,993

6,550

10,879

 


                  

                  

                  

Cash flows from investing activities





Acquisition of subsidiaries, net of cash acquired


-  

(1,234)

 (1,234)

Software development costs


 (8,748)

(16,925)

 (31,899)

Proceeds from disposal of intangible assets


2,557

-

-

Costs arising from disposal of intangible assets


(262)

-

-

Purchase of property, plant and equipment


(11)

(287)

 (180)

 


                  

                  

                  

Net cash used in investing activities

 

(6,464)

(18,446)

(33,313)

 


                  

                  

                  

Cash flows from financing activities





Acquisition of own shares


(69)

-

(1,031)  

Proceeds from issuance of shares


12,299

-

                    -  

Transaction costs arising from issuance of shares


(889)

-

-

Payment of principal portion of lease liabilities


(168)

(262)

 (531)

 


                  

                  

                  

Net cash generated from/(used in) financing activities

 

11,173

(262)

(1,562)

 

 

                  

                  

                  






Cash and cash equivalents





Net increase/(decrease) in the period

 

6,702

(12,158)

 (23,996)

At beginning of period


2,500

26,496

26,496



                  

                  

                  

At end of period


9,202

14,338

2,500



                  

                  

                  






 

 



 

TINYBUILD INC.                                                                                              

 

NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024

 

 

1         GENERAL INFORMATION

 

tinyBuild Inc. ("the Company") is a public company limited by shares, and is registered, domiciled and incorporated in Delaware, USA. The address of the registered office is 1239 120th Ave NE, Suite A, Bellevue, WA 98005, United States.

 

The Group ("the Group") consists of tinyBuild Inc. and all of its subsidiaries. The Group's principal activity is that of an indie video game publisher and developer.

 

The Board of Directors approved this interim financial information on 30 September 2024.

 

2         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

These condensed, consolidated financial statements for the interim half-year reporting period ended 30 June 2024 have been prepared in accordance with IAS 34 'Interim Financial Reporting'. These interim financial statements do not constitute full financial statements and do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 31 December 2023.

 

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The Annual Report and Financial Statements for 2023 have been issued and are available on the Group's investor relations' website: https://www.tinybuildinvestors.com/documents-and-presentations.

 

With the exception of the new standards set out below, the Group has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 31 December 2023 annual financial statements.

 

Standard/amendment

Effective date

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) (issued on 22 September 2022)

1 January 2024

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

1 January 2024

 

The above standards, that will apply for the first time in the next annual financial statements, are not expected to have a material impact on the Group.

 

Tax charged within the 6 months ended 30 June 2024 has been calculated by applying the effective rate of tax which is expected to apply to the Group for the year ending 31 December 2024 as required by IAS 34.

 

The financial statements have been prepared on the historical cost basis except for, where disclosed in the accounting policies, certain financial instruments that are measured at fair value. The financial statements are prepared in US Dollars, which is the functional currency and presentational currency of the Group. Monetary amounts in these financial statements are rounded to the nearest thousand US Dollars (US$'000).

 

Going concern

The Group remains in a significant net asset position of $69.9 million at the reporting date. The Group continues to have no borrowings and has cash and cash equivalents of $9.2m at the reporting date. Generating further funds through the sale of intellectual property remains an option for the Group. Furthermore, the Group has a number of high-potential games in the pipeline, which are anticipated to contribute to organic revenue growth in the second half of FY24. Having considered the information available and recent changes to the business, the Directors have concluded that there are no material uncertainties related to events or conditions that might cast significant doubt upon the Group's ability to continue as a going concern.

 

As disclosed in the Operational Review, a reduction in workforce was undertaken during the period as part of the Group's measures to reduce the cost base.



 

 

 

3       REVENUE

6 months ended 30 June 2024

6 months ended 30 June 2023

Year ended 31 December 2023


Unaudited

Unaudited

Audited

An analysis of the Group's revenue is as follows:  

$'000

$'000

$'000


 

 

 

Revenue analysed by class of business




Game and merchandise royalties

16,837

17,455

36,581

Development services

1,408

5,224

6,919

Events

590

616

1,163


                       

                  

                  

 

18,835

23,295

44,663


                  

                  

                  





 

 

4        SEGMENTAL REPORTING

 

IFRS 8 'Operating Segments' requires that operating segments be identified on the basis of internal reporting and decision-making. The Group identifies operating segments based on internal management reporting that is regularly reported to and reviewed by the Chief Executive Officer, who is identified as the chief operating decision maker. Management information is reported as one operating segment, being revenue from self-published franchises and other revenue streams such as royalties, licensing, development and events.

 

Whilst the chief operating decision maker assessed there to be only one segment, the Group's portfolio of games is split between those based on IP owned by the Group and those based on IP owned by a third party and hence to aid the readers' understanding of our results, the split of revenue from these two categories is shown below.

 

Game and merchandise royalties

6 months ended 30 June 2024

6 months ended 30 June 2023

Year ended 31 December 2023

 

Unaudited

Unaudited

Audited

 

$'000

$'000

$'000





Owned IP

             13,070

12,765

23,765

Third-party IP

              3,767

4,690

12,816


                            

               

                  

 

             16,837

17,455

36,581

 

               

               

               

 

Four customers were responsible for approximately 75% of the Group's revenues (30 June 2023: three - 51%, 31 December 2023: three - 60%). Four customers were responsible for approximately 43% of the Group's accounts receivable balance (30 June 2023: three - 50%, 31 December 2023: three - 41%).

 

The Group has seven right-of-use assets located overseas with a carrying value of $516,000 (30 June 2023: nine - $272,000, 31 December 2023: nine - $374,000). The Group also has tangible fixed assets located overseas with a total carrying value of $397,000 (30 June 2023: $687,000, 31 December 2023: $541,000). All other non-current assets are located in the US.

 

 

 

 5        EARNINGS PER SHARE

 

 

 

 

 

The Group reports basic and diluted earnings per common share. Basic earnings per share is calculated by dividing the profit attributable to common shareholders of the Group by the weighted average number of common shares outstanding during the period, which excludes any treasury shares held by the Group.

 

Diluted earnings per share is determined by dividing the profit attributable to common shareholders by the weighted average number of common shares outstanding, taking into account the effects of all potential dilutive common shares, including options.


6 months ended 30 June 2024

6 months ended 30 June 2023

Year ended

31 December 2023


Unaudited

Unaudited

Audited


$'000

$'000

$'000

Total comprehensive loss attributable to the owners of the Group

          (6,581)

 

(25,523)

 (62,537)

Weighted average number of shares

 369,513,019

203,284,429

 203,877,356


                    

                    

                    

Basic loss per share ($)

(0.018)

(0.126)

(0.307)


                    

                    

                    









 


6 months ended 30 June 2024

6 months ended 30 June 2023

Year ended

31 December 2023


Unaudited

Unaudited

Audited


$'000

$'000

$'000

Total comprehensive loss attributable to the owners of the Group

          (6,581)

 

(25,523)

 (62,537)

Weighted average number of shares

 369,513,019

203,284,429

 203,877,356

Dilutive effect of share options

                -  

-    

-

Dilutive effect of warrants

                -  

-

-

Dilutive effect of restricted stock awards

                -  

-      

                     -  


                    

                    

                    

Weighted average number of diluted shares

 369,513,019

203,284,429

203,877,356


                    

                    

                    

Diluted loss per share ($)

(0.018)

(0.126)

              (0.307)


                    

                    

                    

 

The 2,837,095 options outstanding at period end (30 June 2023: 3,143,531 and 31 December 2023: 2,963,027), 1,511,449 warrants outstanding at period end (30 June 2023: 1,511,449 and 31 December 2023: 1,511,449) and nil restricted stock awards outstanding at period end (30 June 2023: 477,327 and 31 December 2023: nil) are not included in the calculation of diluted earnings per share because they are antidilutive for the periods ended 30 June 2024, 30 June 2023 and the year ended 31 December 2023. These options could potentially dilute the basic earnings per share in future.

 

Pursuant to IAS 33 'Earnings per Share', options whose exercise price is higher than the value of the Group's security were not taken into account in determining the effect of dilutive instruments. The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings per share.

 

6        ALTERNATIVE PERFORMANCE MEASURES

 

The Directors of the Group have presented the performance measure 'Adjusted EBITDA' as they monitor this performance measure at a consolidated level and they believe this measure is relevant to an understanding of the Group's financial performance. Adjusted EBITDA is calculated by adjusting profit from continuing operations to exclude the impact of taxation, net finance costs, share-based payment expenses, depreciation, impairment of intangible assets, amortisation of purchased intellectual property, acquisition costs, legal and professional costs associated with the purchase of subsidiaries and intellectual property, Ukraine-related expenses and fair value gains on contingent consideration liabilities. Adjusted EBITDA is not a defined performance measure in IFRS. The Group's definition of Adjusted EBITDA may not be comparable with similarly titled performance measures and disclosures by other entities.

 

Amortisation of $4.5m (30 June 2023: $5.0m, 31 December 2023: $10.6m) of software development costs has been included in arriving at Adjusted EBITDA as they are a primary cost in the Group's ordinary course of business.



 

 

 

6 months ended

30 June 2024

6 months ended

30 June 2023

Year ended

31 December 2023

 

Unaudited

Unaudited

Audited


$'000

$'000

$'000





Loss for the period

 (6,486)

(25,283)

 (62,845)

Income tax expense/(credit)

323

(6,414)

 (649)

Finance costs

62

16

                  128

Finance income

 (68)

(261)

 (391)

Share-based payment expenses

102

367

                  414

Amortisation of purchased intellectual property, brands and customer relationships

               1,758

2,327

               4,482

Depreciation of property, plant and equipment

303

496

                  785

Impairment of development costs and other intangible assets

               3,028

27,195

48,055

Legal settlement

-

-

3,500

Ukraine-related costs

                      -  

281

-

Acquisition costs

                      -  

27

27

Other operating income

(137)

-

(619)

Gain on disposal of intangible assets

(773)

-

-


                 

                 

                 

Adjusted EBITDA

(1,888)

(1,249)

(7,113)


                 

                 

                 

 

 

7        INTANGIBLE ASSETS

 

 

 

Brands

 

 

Customer relationships

Purchased intellectual property

Software development costs


$'000

$'000

$'000

$'000

Cost:

 

 

 

 

 

 

As at 1 January 2023

1,815

4,261

29,966

65,698

Additions - internally generated

-  

-  

-  

31,898

Additions - separately acquired

-  

-  

-  

-  

Disposals

-  

-  

-  

 (413)


           

               

               

                 

As at 31 December 2023

1,815

4,261

29,966

97,183

Additions - internally generated

-  

-  

-  

8,748

Disposals

-  

-  

 (2,000)

 (1,159)


           

               

               

                 

As at 30 June 2024

1,815

           4,261

27,966

     104,772


           

               

               

                 








Amortisation and impairment:

 

 

 

 

As at 1 January 2023

806

659

6,900

16,736

Amortisation charge for the year

73

353

4,056

10,652

Impairment charge for the year

-  

2,773

2,912

36,206

Disposals

-  

-  

-  

 (413)


           

               

               

                 

As at 31 December 2023

879

           3,785

13,868

       63,181

Amortisation charge for the period

36

48

1,674

4,537

Impairment charge for the period

-  

-  

-  

3,028

Disposals

-  

-  

 (510)

 (1,128)


           

               

               

                 

As at 30 June 2024

915

           3,833

15,032

       69,618


           

               

               

                 






Carrying amount:





As at 30 June 2024

900

              428

12,934

       35,154


           

               

               

                 

As at 31 December 2023

936

              476

16,098

       34,002


            

           

               

               

                 

             



 

During 2024, the Group has recorded impairment losses of $3.0m against the carrying value of software development costs. $2.9m resulted from a value-in-use calculation being performed for Broken Roads for which an impairment indicator was identified due to a disappointing launch in April 2024. The related recoverable amount was calculated to be $0.5m. The value in use calculation was based on a pre-tax discount rate of 7% and forecast net revenues.

 

A 1% increase/decrease in the pre-tax discount rate would increase/decrease the impairment charge by $5,000.

 

The disposals during H1 2024 related to the sale of the Totally Reliable Delivery Service and Surgeon Simulator games. The total cash consideration was $3m. The gross proceeds received were $2.6m with costs of disposal being $0.3m. Therefore, net proceeds of $2.3m has been received as at 30 June 2024. A net gain on disposal of $0.8m was recognised. The remaining gross proceeds of $0.4m will be received at the earlier of the Company meeting certain conditions or 6 months past the closing date.

 

8          SHARE CAPITAL

 

 

30 June

2024

31 December 2023

 

 

 

Unaudited

Audited


 

 

Number

Number

Class of share

 

 

 

 

Ordinary shares of $0.001 each



397,219,319

203,878,238




                    

                    









30 June

2024

31 December 2023




Unaudited

Audited




$'000

$'000

Class of share


 

 

 

Ordinary shares of $0.001 each



397

204




                  

                  

 

On 17 January 2023, 29,251 Ordinary shares of $0.001 each were issued to employees for $nil consideration. The shares are subject to a 12-month lock-up period.

 

In January 2024, a fundraise was approved in a special meeting on 26 January 2024. As part of this fundraise, 193,341,081 Ordinary shares of $0.001 each were issued at 5 pence per share raising gross proceeds of approximately $12.3 million in aggregate. Net proceeds were approximately $11.4 million.

 

9        CASH GENERATED FROM OPERATIONS

 

6 months ended

30 June 2024

6 months ended

30 June 2023

Year ended

31 December 2023

 

 

Unaudited

Unaudited

Audited


 

$'000

$'000

$'000






Loss for the period


 (6,486)

(25,283)

(62,845)

Adjustments for:





Share-based payments


                  102

367

414

Amortisation of intangible assets


               6,295

7,323

15,134

Impairment of development costs and other intangible assets


3,028

27,196

48,055

Gain on disposal of operations


-

-

 (708)

Write off of bad debt


946

-

87

Depreciation of tangible fixed assets


                   303

496

785

Loss on disposal of tangible fixed assets


                       9

39

80

Gain on disposal of intangible assets


(773)

-

-

Finance costs


62

16

 (391)

Finance income


(68)

(261)

128

Income tax expense/(credit)


323

(6,414)

 (649)






Movements in working capital:





Decrease in receivables


              2,810

9,250

12,398

Decrease in payables


              (4,241)

(5,075)

 (399)






Income tax paid


(323)

(1,365)

(1,472)



                  

                  

                  

Cash generated from operations


1,987

 6,289

10,617



                  

                  

                  

 

10      RELATED PARTY TRANSACTIONS

 

An analysis of key management personnel remuneration is set out below:

 

Key management personnel remuneration

6 months ended

30 June 2024

6 months ended

30 June 2023

Year ended

31 December 2023


Unaudited

Unaudited

Audited


$'000

$'000

$'000


 

 

 

Short term employee benefits

636

1,559

2,511

Equity-settled share-based payments/(reversals)

(52)

15

46


                  

                  

                  

 

584

1,574

2,557


                  

                  

                  

 

One member of key management left the Group during the period, forfeiting 125,932 share options with a weighted average exercise price of $1.59.

 

Transactions with other related parties

 

On 4 December 2023, tinyBuild agreed to a binding summary of terms relating to a global settlement agreement to be entered into with Steve Escalante, Lance James and Stall Proof, LLC relating to a claim which had been made against tinyBuild following its acquisition of Versus Evil LLC ("Versus Evil") and Red Cerberus LLC ("Red Cerberus") in November 2021. The Claimants were the previous owners of Versus Evil and Red Cerberus. As a result, tinyBuild agreed to pay to the Claimants $3.5 million in cash (in addition to legal costs). The first payment was paid in December 2023 of $1.5 million. The second payment of $2 million was paid during the period on 9 February 2024.

 

11      SUBSEQUENT EVENTS

 

Subsequent events have been reviewed and evaluated up to 30 September 2024 when these financial statements were approved and authorised for issue by the Directors, and there are no material events to be disclosed or adjusted for in these financial statements.

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