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Kixeye Shareholders Sue Stillfront for $ 30 Million Over Earnings Disputes

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Kixeye Shareholders filed a proceeding against Stillfront Group Over $ 30 Million in Disputed Revenue Payments Related to Get..

Fortis Advisors, a representative of sellers acting on behalf of Kixeye’s shareholders, has filed a proceedings in the Delaware Court of Justice today. In it, Kixeye claims that Stillfront deliberately violated the merger agreement beyond the $ 30 million “revenue” or bonus paid if Kixeye reached a certain milestone. Proceedings provide a window to usually private negotiations between businesses.

We asked Stillfront, based in Stockholm, Sweden, for comment. In June 2019, Stillfront purchased Kixeye for $ 90 million under a $ 30 million revenue contract based on Kixeye’s 2019 forecast financial performance.

Kixeye has created a popular real-time strategy game for mobile devices and PCs. The title included games such as War Commander: Rogue Salt, Battle Pirates, War Commander, and Vega Conflict.

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Fortis accused Stillfront of making some creative accounting that made Kixeye’s results look worse than they really were in a malicious attempt to avoid paying revenue.

Under the original deal, Stillfront did not acquire all of Kixeye. Kixeye planned to spin off operations related to the unreleased game Kingdom Maker, which is still under development.

Revenues are based on a non-GAAP measure of financial performance called Adjusted EBITDA (Interest, Taxes, Depreciation, and Pre-Amortization Revenues). Stillfront is said to have retroactively “re-adjusted” or deliberately manipulated pre-merger costs, making it nearly impossible for Kixeye to reach its revenue targets.

Stillfront also allegedly reduced Kixeye’s spending on games after the merger, but prior to that, games were considered stable and profitable. Prior to the acquisition, Kixeye had more than 70 million unique users.

In January 2020, Stillfront announced that it had fired the Kingdom Maker team and reduced the employment of about 20 people. However, it’s not clear why they said that as the KingdomMaker team moved to Global Worldwide and continued to play games there.

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Kixeye Shareholders Sue Stillfront for $ 30 Million Over Earnings Disputes

https://venturebeat.com/2021/10/13/kixeye-shareholders-sue-stillfront-for-30m-over-earnout-dispute/ Kixeye Shareholders Sue Stillfront for $ 30 Million Over Earnings Disputes

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