Shrapnel Game Studio Founders Say Majority Shareholder Is Staging a Coup

Neon Machine, the game studio behind the upcoming first-person shooter blockchain game Shrapnel, is embroiled in a legal battle over an alleged coup at the company. 

Six founders at the studio, which spun off from HBO in 2020, have filed a lawsuit in the Delaware Court of Chancery against 4D Factory investment firm CEO Cort Javarone, one of Neon’s investors, as well as 4D equity holder Steve Horowitz and private equity firm Northern Pacific Group’s Scott Honour, Law360 first reported Monday.

The Neon founders who filed the lawsuit include CTO and Studio Head Don Norbury, Chief Creative Officer Colin Foran, COO Aaron Nonis, CMO Mark Yeend, Neon’s Head of Business Development Naomi Lackaff, and Neon’s reportedly ousted CEO Mark Long, according to the report.

Law360 wrote that Javarone allegedly appointed himself as Neon CEO on November 13 and also removed Long from the studio’s board of directors (Long still has Shrapnel CEO listed as his job title on Linkedin, however).

But Long asserted on Twitter Tuesday that he remains in his CEO role.

“The complaint speaks for itself. I’m still CEO and they just got served. #Molonlabe,” Long said, referring to the defiant Greek phrase “come and take them.”

Javarone is also the reason that Neon investors at Griffin Gaming Partners and Polychain Capital haven’t received their preferred shares yet, according to the complaint. 

The Neon executives allege that Javarone is trying to take over their studio and has gone against these contractual promises for new investors.

The complaint alleges that the defendants “are acting only to entrench themselves in a board majority, causing severe harm to Neon and exposing it to tens of millions of dollars in liability, restricting its ongoing business operations, and eliminating its ability to raise additional funds.”

Now, Neon’s executives are concerned that Javarone is allegedly trying to raid or “attempting to raid Neon’s coffers” to resolve $4.5 million of Javarone’s own debts. Javarone has reportedly filed for Chapter 5 bankruptcy for his businesses, per the Law360 report.

In the world of blockchain gaming, Shrapnel’s Neon—which has roughly 70 employees—has seen a substantial inflow of investment funds. Last month, Neon raised $20 million in a Series A round from the likes of Polychain and Griffin. It’s unclear, however, whether this fresh capital might now be at risk. 

These allegations suggest an internal takeover may be well underway at the Seattle-based studio—one that could harm the future of Neon’s highly-anticipated extraction shooter game.

Long and Shrapnel’s PR team did not respond to Decrypt’s requests for comment in time for publication. 

After the news of the lawsuit began swirling on Twitter Tuesday, Shrapnel’s account released a short statement.

“For legal reasons, we cannot comment on ongoing proceedings,” Shrapnel wrote. “However, our players, creators, and the wider community can rest assured that we remain fully in control of the development, funding, and operations of our groundbreaking AAA first-person extraction shooter and remain focused on delivering our early access gameplay launch in the coming weeks.”

Norbury also wrote on Twitter Tuesday: “Shrapnel will always aggressively protect our team, our project, and our community.”

“We’re building a best-in-class game and state-of-the-art platform and nothing will divert from that mission,” Shrapnel’s Studio Head shared.

Following the original publication of this article, Javarone provided the following statement to Decrypt:

“Needless to say, we disagree with virtually all of the allegations made by plaintiffs in the pending action they filed against Neon Machine, Inc. and its directors, which was purposely misleading both by omission and misstatement of the most material facts,” he said. “At the moment, we are in the process of retaining counsel to file our initial response.”

Editor’s note: This story was updated after publication to add the statement from Javarone.

Edited by Andrew Hayward