Iconic brand Gfinity is to close its eSports division as it says the market remains “soft” with “limited profitable growth opportunities”.
It has also disposed of subsidiary Athlos, a new gaming platform, for just £1.
Gfinity was founded in 2012 and integral to the burgeoning eSports scene. Running competitions across an array of platforms and titles, it launched the Gfinity Arena in London to host high-profile tournaments and built a gaming platform before listing on the London Stock Exchange in 2018.
However its share price has plummeted from around £15 at launch to 11 pence at the time of writing.
Earlier this year CEO John Clarke stepped down amid plans to raise funds for a restructure of the company, with the aim of finding a pathway to profitability by the end of 2023. It also closed the Gfinity Arena venue.
Now the company has closed down its eSports division entirely while its board has also announced the divestment of 72.5% of new gaming platform Athlos – which it says has made good progress in its beta phase – to Tourbillon Group UK Limited for £1.
All future liabilities associated with Athlos will be assumed by Tourbillon, and the buyer will provide growth capital to support the business moving forward.
In the year to December 2022, Athlos generated revenue of £400,000, with a loss before tax of £500,000. If capitalised development expenditure is added back, the loss before tax was £1.2m. The net assets of Athlos as at December 2022 was £1.2m.
The deal will “significantly reduce the cash burn of the company”, Gfinity said. Following months of cuts, its monthly cost base in July will be £185,000, compared to £600k in H1 FY23. The company currently has cash reserves of £400,000.
“The directors believe that these cost savings will provide… an organisation that can achieve operating profitability on an EBITDA basis in the near term,” it stated.
Gfinity will now focus on digital media and its significant position in the gamer website industry despite a large dip in users in 2022 due to changes in the Google search engine. It also said its Stockinformer website has been rebuilt with increased capabilities to scale across thousands of products with increased accuracy of pricing.
“This has been a difficult year for digital media, with the company having losses across all verticals,” said chairman and founder Neville Upton. “However after a significant restructuring, we are confident that Gfinity will flourish without the requirement to raise further working capital.
“By focusing on our core web offering for gamers, we are able to remove the capital intensive businesses of software development and esports events, and focus on returning to a positive return on investment.”