Mind Candy, the creator of hit children’s game Moshi Monsters and a company that has been championed as one of London’s most successful tech startups, is on the brink of going out of business, according to a Companies House filing and a report from Bloomberg.
The company and its auditors said on Tuesday that it could go bust early next year if it fails to expand its revenue and renegotiate the repayment of a £6.5 million high-interest loan from lender TriplePoint.
Mind Candy, which has struggled with the “one hit wonder” problem, saw its revenues drop by 46% in 2015 from £13.2 million in 2014 to £7.2 million ($8.8 million) in 2015, according to the Companies House filing. That’s a huge drop on the £47 million revenue figure that Mind Candy reported in 2012. Meanwhile, pre-tax losses for Mind Candy came in at £10.9 million for 2015, despite cutting more than a third of its staff over the year.
The company, founded in 2004 and based in Shoreditch, is due to begin making larger repayments on the loan in January and pay it off in full by next June. It’s concerned that these repayments could drive it out of business and is therefore planning to try and work out a new deal with TriplePoint.
“Management has prepared cash flow projections for the 2016 and 2017 financial years,” Mind Candy wrote in the Companies House filing. “These projections indicate that the company requires an extension to the payment terms of the existing long-term loan.
“The company has a good relationship with the lender and will look to renegotiate the repayment schedule towards the end of 2016. In the event that the negotiations are not successful, or that the company cannot generate sufficient revenues, then there exists a material uncertainty which may cast significant doubt over the company’s ability to continue as a going concern.”
Mind Candy, which makes the majority of its money from subscriptions to its online games, as well as licensed toys, is hoping to gain fresh revenues streams from a new game called Petlandia and a relaunch of Moshi Monsters.
Mind Candy CEO Ian Chambers said in a statement: “It’s no surprise that Mind Candy has had a few challenging years.
“Over the past year, with the continued support of our investors and creditors, we have been focusing development on Petlandia and Moshi Monsters. We will be revealing more on both worlds in due course.”
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