Kixeye’s seller representative Fortis Advisors has filed a lawsuit in Delaware Chancery Court against Stillfront over a disputed earnout payment says VentureBeat.
Back in June 2019, Stillfront bought Kixeye for $90 million with the earnout based on Kixeye’s projected financial performance for 2019.
With this original deal, Stillfront did not acquire the whole of Kixeye, with the latter intending to spin off operations relating to the yet unreleased, in-development game, Kingdom Maker.
Early in 2020, Stillfront announced that it had laid off the team behind Kingdom Maker, which eliminated around 20 jobs.
The reason for this comment is unclear however, since the Kingdom Maker team moved over to Global Worldwide and is continuing development of the game.
Fortis Advisors has accused Stillfront Group of creative accounting to made Kixeye’s results look worse to evade this earnout payment.
The earnout was be based on a non-GAAP measure of financial performance which Stillfront purportedly readjusted retroactively, or else purposely manipulated its pre-merger expenses, making it all but impossible for Kixeye to hit the earnout target.
Stillfront Group also allegedly cut spending on Kixeye’s games significantly after the merger.