tinyBuild, Inc. — Earnings Release 2023

Apr 23, 2024

National Storage Mechanism | Additional information

RNS Number : 5932L

tinyBuild, Inc.

23 April 2024

23 April 2024

tinyBuild, Inc

("tinyBuild" or the "Company")

Preliminary Unaudited Results for the year ended 31 December 2023

tinyBuild (AIM:TBLD), a premium video games publisher and developer with global operations, announce s the Company's unaudited results for the twelve months ended 31 December 2023.

Financial Summary (unaudited):

(12 months ended December, $'000)	2023	2022	change
Revenue	44,663	63,295	-29%
Operating profit/ (loss)	(63,757)	15,923	nmf
Profit/ (loss) before tax	(64,494)	15,930	nmf
Basic earnings/ (loss) per share ($ cent)	(30.7)	5.7	nmf
Operating cash flow	10,879	19,268	-44%
Net cash, at 31 December	2,500	26,496	-91%
Adj. EBITDA1	(7,113)	24,355	nmf
Adj. EBITDA margin	nmf	38.5%

1 Excludes share-based compensation expenses and exceptional items (e.g. impairment); includes amortisation of Development costs

Financial highlights:

·	Revenue declined 29% to $44.7m (2022: $63.3m), reflecting the expected drop in large contracts (e.g. subscription programs, development partnerships and exclusivity agreements. Notably, Versus Evil saw over 60% revenue decline in the period as a result of game delays.
·	Adj. EBITDA decreased to negative $7.1m (2022: positive $24.4m), primarily due to lower revenues from large contracts, higher amortisation of development costs and inflationary pressures.
·	Operating loss was $63.8m (2022: $15.9m profit), as a result of $48.1m impairment charges ($36.2m on development advances and $11.9m on intangibles assets), a $3.5m one-off legal settlement alongside lower revenues and higher costs. Excluding one-off charges, the operating loss is $12.2m.
·	Loss before tax was $64.5m (2022: $15.9m profit) and basic EPS was -30.7c (2022: 5.7c). Adjusted EPS, excluding one-off charges, was -5.4 c (2022: 11.21c ).
·	Operating cash flow decreased to $10.9m (2022: $19.3m), as a result of revenue decline and unfavourable revenue mix (higher share of third-party titles).
·	The cost action plan was implemented swiftly at the end of 2023, resulting in nearly $10m annualised savings in 2024.
·	A global settlement was achieved with Stephen Escalante including a $1.5m cash payment in December 2023, plus a $2m cash payment in February 2024.
·	As expected, net cash at 31 December 2023 was $2.5m compared to $26.5m at 31 December 2022, reflecting lower revenues, higher costs and $31.9m investment in development costs (2022: $35.8m).

Operational highlights:

·	Strong back catalogue sales representing 92% of total revenue (2022: 80%), including Hello Neighbor 2 and Potion Craft 1.0 which launched at the end of 2022.
·	Contribution to revenues from own-IP titles decreased to 68% of Gaming revenues (2022: 77%), as a result of fluctuations in the portfolio mix with third party titles performing strongly in 2023.
·	In 202 3 , tinyBuild released a number of new titles, including Punch Club 2, I am Future (Early Access), Rhythm Sprouts, Farworld Pioneer and Slime 3K, plus DLCs for Spiderheck, Graveyard Keeper, Asterigos and Not For Broadcast, and a number of platform launches.

Employee Benefit Trust:

·

Since the Company's previous update on 21 December 2023, the Employee Benefit Trust has purchased an additional 1,015,058 ordinary shares on the market and now holds a total of 3,916,587 ordinary shares. 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 future share awards and option exercises of vested options granted.

Post Period End highlights:

·	In January 2024, tinyBuild raised $12.3m ($11.4 m net proceeds) from existing and new shareholders in a placing, subscription and open offer.
·	As at 31 March 2024, post the January fundraise, the Company had cash levels in the high single-digit millions. This is anticipated to reduce towards the half year as the Company invests in upcoming game releases scheduled for the second half of this year. The announcement trailer of Kingmakers collected tens of millions views across all social networks in the first few weeks, making it one of the most successful announcements in the Company's history. The Company also announced new titles Duckside and RBO.
·	Among other titles already announced, Streets of Rogue 2, Level Zero, VOIN, Ferocious, SAND and Rawmen continue to track in line with expectations.
·	In February 2024, tinyBuild sold Total Reliable Delivery Service to Atari for an undisclosed sum. There has been two studio closures post year end; Moon Moose LLC was closed in February 2024 and Demagic LLC was closed in March 2024.
·	In March 2024, Michael Schauble, Chief Commercial Officer, resigned from tinyBuild to focus on his family. Michael's role and responsibilities have been successfully taken over by the existing business development and leadership team.

Outlook

·	The pipeline for 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:

"2023 was a tough year for the whole video games industry and demonstrated once again the importance of strong diversified back-catalogue and investing in long-term, sustainable franchises. We see early signs of success in our shift towards the 1,000 hour game and we will continue to experiment with the aim to add additional revenue streams to our core business."

"On a personal note, I want to thank our Chairman, Henrique Olifiers, the Board of Directors and all staff for their unwavering support and incredible dedication navigating through these tumultuous times."

Enquiries :

tinyBuild, Inc Alex Nichiporchik - Chief Executive Officer and co-founder Giasone (Jaz) Salati - Chief Financial Officer	[email protected]
Berenberg (Nominated Adviser and Broker) Mark Whitmore, Ciaran Walsh, Milo Bonser	+44 (0)20 3207 7800
SEC Newgate (Financial PR) Robin Tozer, Harry Handyside, Molly Gretton	[email protected] +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 70 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 by the London Stock Exchange, in March 2021.

For further information, visit: www.tinybuildinvestors.com .

Chairman's Statement

Restarting the game

It's an understatement to proclaim it has been a challenging financial year for the tinyBuild. From key changes to its executive team to the closure of studios; from delayed titles to an equity fundraise underwritten by its CEO and founder, tinyBuild has worked with and around a great deal of issues, and the management continues to work hard to address the challenges of a fast-changing industry.

While it's true the industry as a whole faced headwinds in the past twelve months, the travails of the Group should not be solely ascribed to these variables. Our merger & acquisitions (M&A) growth strategy delivered underwhelming results, prompting a refocus towards internal production which, although slower, in turn allows for more control and predictability, likely improving outcomes in the form of more games that perform in line with forecasts.

Given our stated ambition of transitioning a significant portion of our portfolio from premium games to games as a service, this realignment towards production and publishing is key and features higher odds of delivering the expected results. Greenshoots of this work can already be seen in the form of the successful announcements of Kingmakers, Level Zero: Extraction and DUCKSIDE, and how these titles' premises resonated with players to a higher degree compared to the titles the group announced or launched last year.

Overall, the fundamentals of the games industry remain solid and promising, full of opportunities, not least the opening gap in release windows that is being created by the recent series of titles cancellations and teams' closures industry-wide: in the next 12 to 36 months, there should be fewer competing titles launched than otherwise across all platforms, creating more space for our games to be seen and experienced. This puts renewed demand over the tinyBuild teams, in particular its executive group, to go back to the basics that formed its earlier success stories: its ability to produce and find high-quality IP rather than offloading this mandate to companies brought into tinyBuild through M&A.

The executive team's conviction in its ability to deliver against the stated objectives is exemplified by the CEO's actions when reinvesting into the business at a critical juncture. This belief is shared throughout the Group, and bolstered by the recent titles announcements' reception, pointing towards the potential of our upcoming games and their alignment with the group's long term strategy.

What remains now is to execute on the new strategy, and live up to the expectation of these games both on production and publishing fronts - something tinyBuild has the capability to deliver over the coming years.

Henrique Olifiers

Non-Executive Chairman

Chief Executive's Review

2023 has been the reset year of the games industry, which is bleeding into 2024. We've seen development budgets in AAA skyrocket, which led to, despite record-setting sales, also record-setting layoffs, and a complete reshuffle of allocation of capital. Many studios have realized the hardships of building efficient teams remotely. Most studios are readjusting to listening to gamers first and foremost, and using real data to make decisions. All while megahits such as Palworld and Helldivers 2 are reaffirming our strategy of investing into deeply replayable, emergent gameplay products.

In 2023 we have refocused on products that connect with audiences, using hard data to back it up, evidenced by early 2024 traction and announcements. We are also leaner and more efficient, with a lower and more flexible cost base.

We're all gamers at tinyBuild. It's all about the games. My full attention has been on our games product since post the fundraise at the start of the year.

Tectonic shifts in the industry

Over the course of 2023 funding for video games dried up completely. All of the sudden, capital was not cheap anymore, if it was accessible at all. At the same time, the wave of labour cost inflation caused by the invasion of Ukraine aggravated pressure on development budgets, which were already particularly high, so funding even the most promising game became incredibly hard in the context of the funding environment before 2023.

As the development of a game was becoming more difficult to finance, a huge number of games developed in previous years were being released, without sufficient market demand to support all of them. A good and fun game that would have performed really well only a few years back may just drown in the sea of new launches and even struggle to cover its costs.

For a game to get noticed now, you need to have a brand new idea, cool-looking graphics, top-notch technology, constant two-way communication with your audience and impeccable marketing strategy. The relationship between developer and publisher is even more important and is the only way to achieve a successful launch.

Adapting our strategy

Over the past few years, we have continued to adapt our strategy to the changing environment, shifting gradually to the 1,000-hour game. When players are so completely fascinated by the experience that nothing else matters. They spend over a year playing it, for several hours every day. Every single day. We all have these memories from our youth. Mortal Kombat, Tekken, GTA SAMP (which morphed into GTA Online), Counter-Strike, Team Fortress 2, World of Warcraft, amongst the many examples .

The easiest way to create a game like these is to get thousands of developers churning out enormous amounts of content in a mega franchise. It's absolutely fine to do so. If I think of it though, the amount of money poured into some of my favourite games is really scary. So we took a different tack, we look for emergent gameplay based on the interaction systems instead of content. Games where the players may decide their own definition of win. Games like Minecraft or DayZ, H1Z1, Rust, ARK, The Culling even. If you grew up playing Minecraft, your game experience is not about a game saying you did great. It's about knowing you did great. It's about the emotional satisfaction of your own set goal and achieving that goal.

Let's first talk about multiplayer since this is the obvious focus for us. Secret Neighbor, SpeedRunners, Pandemic Express, Deadside, the upcoming SAND, Rawmen, Kingmakers, Level Zero - all of these are multiplayer games. Here's what we learned from these games and playing other titles:

●    You release a game that blows up.

●    Tens of thousands of users play the game.

●    Two weeks later the buzz starts to drop off.

●    Development teams need to rapidly scale up and produce more content so that veteran players come back.

We were stuck in exactly this grind loop with Secret Neighbor, working overtime to get content updates out the door. Even then, new players can't really appreciate the later-stage level content as they're still enjoying the vanilla game. Instead now we focus on adding more systems to the game so that all players can experience from the outset and interact with each other on an equal level. Social interaction in multiplayer games is another gameplay mechanic which is not fully understood and should be used in single player experiences. The addition of crafting, looting, farming and similar mechanics also allows users to create their own progression and their own personal space in the game.

So here we have a formula to create worlds where players can spend 1,000 hours, without committing a AAA budget.

KINGMAKERS - the potential to be the next big thing?

Kingmakers is a shooter/real time strategy hybrid where you fight off thousands of enemies in a medieval battle - using modern weapons. The game is developed by the extremely talented team behind Road Redemption, and the tech behind it has been in the works for over four years.

The announcement of this title is a testament to our approach to production and marketing of new IP. The announcement trailer received tens of millions of views across social media, propelling the game to top 50 wishlisted on Steam within weeks. We are working hard to meet player expectations when the game launches.

Level Zero: Extraction - re-announcement

If something isn't working, you need to adapt and overcome. Level Zero was announced two years ago as an asymmetric multiplayer title, and while it got initial traction, we were concerned about the longevity of the concept. A year ago we came together with the design team and looked at the market landscape, agreeing we had an opportunity to pivot into an exciting direction. Typically re-announcing a game gets little to no traction.

Our production and marketing teams came up with a brilliant plan. Let's re-announce the game in its new form - as an Extraction-style horror title - focusing on the unique aspects of several human teams fighting each other, and an overarching threat, a team of monsters that hunts everyone. We did an amazing trailer, and actually gave the game to targeted influencers to play it. The shortest way to describe it is "Alien Isolation meets Escape from Tarkov", and it hit the target audience exactly how we forecasted. A new, fresh take with live gameplay sessions recorded for influencers. This rejuvenated interest in the title, and set us up for a public playtest with close to 100,000 players opting in.

We have proven that we don't need a AAA budget to reach large audiences. We have plenty of exciting projects in the pipeline for 2024 and beyond. This pipeline combined with the recent fundraise, leaves tinyBuild well positioned. I am as confident in the opportunity ahead and we all remain 100% committed to ensuring we capitalise on it.

2024 and beyond is the time to shine.

Alex Nichiporchik

CEO and Founder

Chief Financial Officer's Review

2023 was a testing year. Testing for our staff and testing for the whole Company. Game delays at Versus Evil and inflationary cost pressures added to a sharp decline in revenues from large deals into the end of the year. We regrouped once more and together we made some difficult decisions. We took action on costs to re-align expected revenues with planned growth investments and we raised net proceeds of over $11m in new capital, welcoming Atari as a new core investor in tinyBuild.

The full impact of the internal reorganisation will become visible only in 2024 which started with cautious investments in high-potential games that have already received validation from their respective audiences.

Revenue

Revenue generated from games sold to consumers were resilient at $34.2m (-1% y-o-y), but the sharp drop in revenues from large contract (e.g. subscription programs, development partnerships and exclusivity agreements) caused Company revenues to decline by 29% (2022: +21%) from $63.3m to $44.7m. Events revenues increased over 100% in 2023 with launches in new locations across Western and Central Europe.

Revenue generated from own-IP (1st and 2nd party games) declined to 65% of gaming revenues (2022: 77%), as a result of changes in portfolio mix. Revenues from back-catalogue increased to 92% of total (2022: 80%), with successful new releases including I am Future (Early Access) and Punch Club 2. The top 5 games generated 46.8% of total revenues (2022: 44.8%), and the top 10 games 65.4% (2022: 66.3%), demonstrating broad diversification across audiences, genres and technologies.

Operating Profit and Adjusted EBITDA

Operating loss was $63.7m (2022: $15.9m operating profit), impacted by the $18.6m decline in revenues, the $36.2m impairment of software development costs and $11.9m impairment of other intangible assets. Exceptional charges for 2023 relate to a $3.5m legal settlement. Included within the operating loss is a further $0.6m of charges in relation to the conflict in Ukraine, where the situation remains uncertain and management cannot exclude further charges in the future.

Adjusted EBITDA is presented net of amortisation of development costs, excluding share-based compensation expenses, amortisation of purchased IP and other intangible assets and one-off costs. Adj. EBITDA loss was $7.1m (2022: $24.4m profit), largely driven by the decline in revenues, aggravated by inflationary pressure on costs resulting from the geopolitical and macroeconomic situation. The full impact of cost action carried out before the end of 2023 will be visible in 2024.

Interest income and taxation

Interest income was $0.4m (2022: $0.1m) and tax provision $1.4m (2022: $0.5m).

Financial Position

In 2023, the net cash position decreased to $2.5m from $26.5m, as investments in new games including a number of larger-budget titles more than offset cash generated by the operations. In December tinyBuild also paid the $1.5m as part of the legal settlement, with a further $2m paid in February 2024. Capitalised software development costs decreased from $35.8m to $31.9m in 2023 as a result of more selective investments in the upcoming pipeline releases. As at 31 March 2024, post the January fundraise, the Company had cash levels in the high single-digit millions. This is anticipated to reduce towards the half year as the Company invests in upcoming game releases scheduled for the second half of this year.

Goodwill decreased from $3.7m to zero, following the impairment of Versus Evil and Red Cerberus. IP decreased to $16.1m (2022: $23.1m) and Software Development to $34.0m (2022: $49.0m) as the impairment carried out in 2023 more than offset additions.

Cash Flow

Cash flows from operating activities decreased from $19.3m to $10.9m primarily due to lower revenues and game delays at Versus Evil, more than offsetting the decrease in investments. Timing issues (e.g. December sales) also impacted net working capital. It is important to note that timing issues can fluctuate year over year and variability here is to be expected especially during the Holiday season and partners' payment terms.

Employee incentive plan and EBT update

Since the Company's previous update on 21 December 2023, the Employee Benefit Trust has purchased an additional 1,015,058 ordinary shares on the market and now holds a total of 3,916,587 ordinary shares. The EBT was setup in 2022 for the benefit of current and future employees and will continue to act independently of the Company to satisfy potential future option exercises of vested options granted.

As previously announced, the Remuneration Committee of tinyBuild intends to utilise share awards to incentivise and retain key employees and executive directors. 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. A further announcement will be made in due course in connection with these awards, which includes a multiyear vesting share award to Giasone Salati, CFO of the Company. Where possible, the Company has the option to issue shares from the employee benefit trust to satisfy such awards.

Acquisitions and disposals

In December 2023 tinyBuild sold Not Games studio, while retaining Not For Broadcast, a critically acclaimed full motion propaganda simulator. tinyBuild had acquired the studio in March 2023, ahead of the game's launch on consoles.

Giasone (Jaz) Salati

Chief Financial Officer

TINYBUILD INC.

CONSOLIDATED UNAUDITED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2023

	Note	2023 Unaudited $'000	2022 $'000
Revenue	4	44,663	63,295
Cost of sales		(30,980)	(20,592)
Impairment of software development costs		(36,206)	(95)
Gross (loss)/profit		(22,523)	42,608
General administrative expenses		(26,090)	(23,328)
Impairment of intangible assets		(11,849)	(11,075)
Share-based payment expenses		(414)	(1,726)
Non-recurring costs		(3,500)	(1,678)
Other income		619	11,122
Operating (loss)/profit		(63,757)	15,923
Finance costs		(128)	(73)
Finance income		391	80
(Loss)/profit before tax		(63,494)	15,930
Income tax		649	(4,417)
(Loss)/profit for the year		(62,845)	11,513
(Loss)/profit for the year is attributable to:
Owners of the parent company		(62,537)	11,545
Non-controlling interests		(308)	(32)
		(62,845)	11,513
Basic earnings per share ($)	5	(0.307)	0.057
Diluted earnings per share ($)	5	(0.307)	0.056
Adjusted EBITDA*	6	(7,113)	24,355

*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 UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

		2023 Unaudited $'000	2022 $'000
(Loss)/profit for the year		(62,845)	11,513
Other comprehensive income net of taxation
Exchange differences on translation of foreign operations - may be reclassified to profit and loss		(24)	7
Total comprehensive income for the year		(62,869)	11,520
Total comprehensive income for the year is attributable to:
Owners of the parent company		(62,561)	11,552

TINYBUILD INC.

CONSOLIDATED UNAUDITED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023 

	2023	2022
ASSETS	Unaudited $'000	$'000
Non-current assets
Goodwill	-	3,746
Other intangible assets	51,512	76,638
Property, plant and equipment:
- owned assets	661	794
- right-of-use assets	374	342
Deferred tax assets	-	-
Other receivables	385	406
Total non-current assets	52,932	81,926
Current assets
Trade and other receivables	13,666	25,382
Cash and cash equivalents	2,500	26,496
Total current assets	16,166	51,878
TOTAL ASSETS	69,098	133,804
EQUITY AND LIABILITIES Equity
Share capital	204	204
Share premium	65,593	65,593
Own shares	(1,031)	-
Warrant reserve	1,920	1,920
Translation reserve	(17)	7
Retained earnings	(18,213)	43,910
Equity attributable to owners of the parent company	48,456	111,634
Non-controlling interest	(351)	(43)
Total equity	48,105	111,591
LIABILITIES
Non-current liabilities
Lease liabilities	146	97
Deferred tax liabilities	388	1,800
Total non-current liabilities	534	1,897
Current liabilities
Trade and other payables	20,227	20,046
Lease liabilities	232	270
Total current liabilities	20,459	20,316
Total liabilities	20,993	22,213
TOTAL EQUITY AND LIABILITIES	69,098	133,804

TINYBUILD INC.

CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

	Share capital	Share premium	Own shares	Warrant reserve	Translation reserve	Retained earnings	Total equity attributable to owners of the parent company	Non-controlling interest	Total equity
	$'000	$'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
Loss for the year	-	-	-	-	-	(62,537)	(62,537)	(308)	(62,845)
Other comprehensive income:
Foreign exchange differences on the translation of foreign operations	-	-	-	-	(24)	-	(24)	-	(24)
Total comprehensive income for the year	-	-	-	-	(24)	(62,537)	(62,561)	(308)	(62,869)
Transactions with owners in their capacity as owners:
Share-based payment charge	-	-		-	-	414	414	-	414
Own shares acquired	-	-	(1,031)	-	-	-	(1,031)	-	(1,031)
Total transactions with owners	-	-	(1,031)	-	-	414	(617)	-	(617)
Balance at 31 December 2023	204	65,593	(1,031)	1,920	(17)	(18,213)	48,456	(351)	48,105

TINYBUILD INC.

CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

	Share capital	Share premium	Warrant reserve	Translation reserve	Retained earnings	Total equity attributable to owners of the parent company	Non-controlling interest	Total equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 January 2022	203	63,546	1,920	-	30,639	96,308	137	96,445
Profit/(loss) for the year	-	-	-	-	11,545	11,545	(32)	11,513
Other comprehensive income:
Foreign exchange differences on the translation of foreign operations	-	-	-	7	-	7	-	7
Total comprehensive income for the year	-	-	-	7	11,545	11,552	(32)	11,520
Transactions with owners in their capacity as owners:
Dividends paid to non-controlling interests	-	-	-	-	-	-	(148)	(148)
Issue of shares on exercise of options	-	28	-	-	-	28	-	28
Issue of shares, net of transaction costs	1	2,019	-	-	-	2,020	-	2,020
Share-based payment charge	-	-	-	-	1,726	1,726	-	1,726
Total transactions with owners	1	2,047	-	-	1,726	3,774	(148)	3,626
Balance at 31 December 2022	204	65,593	1,920	7	43,910	111,634	(43)	111,591

TINYBUILD INC.

CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023

		2023	2022
		Unaudited $'000	$'000
Cash flows from operating activities
Cash generated from operations		10,617	19,188
Net interest received		262	80
Net cash generated by operating activities		10,879	19,268
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired		(1,234)	-
Software development costs		(31,899)	(35,789)
Purchase of intellectual property		-	(4,150)
Purchase of property, plant and equipment		(180)	(1,180)
Net cash used in investing activities		(33,313)	(41,119)
Cash flows from financing activities
Acquisition of own shares		(1,031)	-
Proceeds from exercise of share options		-	28
Payment of principal portion of lease liabilities		(531)	(365)
Dividends paid to non-controlling interests		-	(148)
Net cash used in financing activities		(1,562)	(485)
Cash and cash equivalents
Net decrease in the year		(23,996)	(22,336)
At 1 January		26,496	48,832
At 31 December		2,500	26,496

TINYBUILD INC.

NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

1             GENERAL INFORMATION

tinyBuild Inc. ("the Company") is a public company limited by shares, and is registered, domiciled and incorporated in Delaware, USA. tinyBuild has been listed on the London Stock Exchange (AIM:TBLD) since March 2021. The address of the registered office is 1239 120th Ave NE, Suite A, Bellevue, WA 98005, United States of America.

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.

2             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The preliminary results for the year ended 31 December 2023 are unaudited. The financial information set out in this announcement does not constitute the Group's financial statements for the year ended 31 December 2023.

This financial information should be read in conjunction with the financial statements of the Group for the year ended 31 December 2022 (the "prior year financial statements"), which are available from the Registrar of Companies.

Accounting policies

The Group's principal accounting policies used in preparing this information are as stated on pages 46 to 53 of the prior year financial statements. There has been no significant change to any accounting policy from the date of the prior year financial statements.

3                     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 Board of Directors, which 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 considers there to be only one segment, the Company's portfolio of games is split between those based on IP owned by the Group and IP owned by a third party and hence to aid the readers understanding of our results, the split of revenue from these two categories are shown below.

#### Game and merchandise royalties	#### Year ended 31 December 2023	#### Year ended #### 31 December 2022
	#### $'000	#### $'000
#### Owned IP	#### 23,765	#### 26,915
#### Third-party IP	#### 12,816	#### 13,105
	#### 36,581	#### 40,020

Three customers were responsible for approximately 60% of the Group's revenues (2022: three - 67%).

The Group has nine (2022: seven) right-of-use assets located overseas with a carrying value of $374,000 (2022: $342,000). The Group also has tangible assets located overseas with a carrying value of $540,757 (2022: $623,000). All other non-current assets are located in the US.

4              REVENUE

	#### Year Ended #### 31 December 2023	#### Year ended #### 31 December 2022
#### An analysis of the Group's revenue is as follows:	#### Unaudited #### $'000	#### $'000
#### Revenue analysed by class of business
#### Game and merchandise royalties	#### 36,581	#### 40,020
#### Development services	#### 6,919	#### 22,744
#### Events	#### 1,163	#### 531
	#### 44,663	#### 63,295
#### Revenue analysed by timing of revenue
#### Transferred at a point in time	#### 37,744	#### 40,551
#### Transferred over time	#### 6,919	#### 22,744
	#### 44,663	#### 63,295

For royalties receivable, the Group recognises royalty income in the period in which it is earned.

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 Company by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is determined by adjusting 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 and warrants to the extent that they are deemed to be issued for no consideration in accordance with IAS 33.

				#### Year ended #### 31 December 2023 Unaudited	#### Year ended #### 31 December 2022
				#### $'000	#### $'000
#### (Loss)/profit attributable to the owners of the company				####  (62,537)	#### 11,545
#### Weighted average number of shares				####  203,877,356	####  203,421,359
#### Basic earnings per share ($)				#### (0.307)	#### 0.057
#### (Loss)/profit attributable to the owners of the company				####  (62,537)	#### 11,545
#### Weighted average number of shares				####  203,877,356	#### 203,421,359
#### Dilutive effect of share options				#### -	#### 1,481,621
#### Dilutive effect of warrants				#### -	#### -
#### Dilutive effect of restricted stock awards				#### -	#### 954,654
#### Weighted average number of diluted shares				#### 203,877,356	####  205,857,634
#### Diluted earnings per share ($)				#### (0.307)	#### 0.056

6              ADJUSTED EBITDA

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, amortisation of purchased intellectual property, acquisitions costs, and other significant non-recurring expenses. 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.

	#### Year ended #### 31 December 2023 Unaudited	#### Year ended #### 31 December 2022
	#### $'000	#### $'000
#### (Loss)/profit for the year	####  (62,845)	#### 11,513
#### Income tax	####  (649)	#### 4,417
#### Finance costs	####                 128	#### 73
#### Finance income	####  (391)	#### (80)
#### Share-based payment expenses	####                 414	#### 1,726
#### Amortisation of purchased intellectual property, brands and customer relationships (note 7)	####                 4,482	#### 3,999
#### Depreciation of property, plant and equipment	####                 785	#### 747
#### Impairment of intangible assets (note 7)	#### 48,055	#### 11,075
#### Legal settlement	#### 3,500	#### -
#### Ukraine-related costs	#### -	#### 1,678
#### Acquisition costs	####                 27	#### 329
#### Other income	####  (619)	####  (11,122)
#### Adjusted EBITDA	####  (7,113)	#### 24,355

7              INTANGIBLE ASSETS

	Goodwill $'000	Brands $'000	Customer Relationships $'000	Purchased Intellectual Property $'000	Software Development Costs $'000	Total $'000
Cost:
As at 1 January 2022	13,202	1,815	4,261	21,320	30,160	70,758
Additions - internally generated	-	-	-	-	35,788	35,788
Additions - separately acquired	-	-	-	8,395	-	8,395
Transfers	-	-	-	251	(251)	-
As at 31 December 2022	13,202	1,815	4,261	29,966	65,697	114,941
Additions - internally generated	-	-	-	-	31,899	31,899
Additions - separately acquired	2,418	-	-	-	-	2,418
Disposals	(2,418)	-	-	-	(413)	(2,831)
As at 31 December 2023	13,202	1,815	4,261	29,966	97,183	146,427
Amortisation and impairment:
As at 1 January 2022	-	10	51	2,687	10,853	13,601
Amortisation charge for the year	-	121	609	3,269	5,787	9,786
Impairment charge	9,456	675	-	944	95	11,170
As at 31 December 2022	9,456	806	660	6,900	16,735	34,557
Amortisation charge for the year	-	73	353	4,056	10,652	15,134
Impairment charge for the year	6,164	-	2,773	2,912	36,206	48,055
Eliminated on disposal	(2,418)	-	-	-	(413)	(2,831)
As at 31 December 2023	13,202	879	3,786	13,868	63,180	94,915
Carrying amount:
As at 31 December 2023	-	936	475	16,098	34,003	51,512
As at 31 December 2022	3,746	1,009	3,601	23,066	48,962	80,384

8              RELATED PARTY TRANSACTIONS

An analysis of key management personnel remuneration is included in the Remuneration Committee Report on an individual basis, and is summarised below:

Key management personnel remuneration			Year ended 31 December 2023 Unaudited	Year ended 31 December 2022
			$'000	$'000
Aggregate emoluments			2,511	2,217
Equity-settled share-based payments			46	88
			2,557	2,305

Transactions with other related parties

The wife of the Company's CEO is the founder and CEO of DevGAMM LLC. During the period, DevGAMM LLC paid dividends totalling $nil (2022: $148,000) to this related party, in lieu of salary which included compensation for the previous two years.

During 2022, the Company also acquired Bossa's IP Catalogue for consideration of $3 million. Henrique Olifiers, Non-executive Chairman of the Company, is the Founder and CEO of Bossa. As a result of this relationship, the IP Catalogue acquisition represents a related party transaction in accordance with the AIM Rules for Companies. The Directors of tinyBuild, excluding Henrique Olifiers, consider, having consulted with Berenberg, tinyBuild's nominated adviser, that the terms of the transaction are fair and reasonable in so far as shareholders of tinyBuild are concerned.

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. tinyBuild has agreed to pay to the Claimants $3.5 million in cash (in addition to legal costs). The first payment was paid within 2023 of $1.5 million. The second payment of $2 million was paid subsequent to year end on 9 February 2024. The $2 million balance is accrued for as at 31 December 2023.

There were no other related party transactions during the period which require disclosure.

​

9              ULTIMATE CONTROLLING PARTY

The Company's ultimate controlling party is Alex Nichiporchik who owned 37.8% of outstanding shares on a fully diluted basis as of 31 December 2023. Subsequent to the year end, the Alex's ownership interest increased to 57.9% (see note 10).

10           POST REPORTING DATE EVENTS

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 are approximately $11.4 million.

As a result of the fundraise, Alex Nichiporchik's ownership increased to 57.9% of outstanding shares on a fully diluted basis. This has no impact on the ultimate controlling party as Alex remains the ultimate controlling party.

In February 2024, tinyBuild sold Total Reliable Delivery Service to Atari for an undisclosed sum. There has been two studio closures post year end; Moon Moose LLC was closed in February 2024 and Demagic LLC was closed in March 2024.

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