Since Hotpink has recently deleted a couple of comments and there's some confusion going around, I wanted to make a loose history of events that people can reference if they're curious. These are not necessarily all in order, and anyone should feel free to comment with additional information. Mostly I'm making this because I don't want people getting angry at either studio, and feel that they wouldn't want that either.

1. With Hot Pink's Tentacle Locker seemingly in the distant past, Strange Girl starts developing Lovecraft Locker as a love letter to the original. Hot Pink Comments in support, and development and public builds start coming out for over a month.
2. Tentacle Locker 2 is announced and a demo is released. Fans start publicly comparing the two, with Hot Pink coming in and assuring them that the properties and studios are separate.
3. Hot Pink begins talking with Strange Girl behind the scenes. Much of this conversation is not public knowledge. The studios appear to have initially been very warm with one another at the start of talks.
4. Hot Pink at one point proposes a merger, which is rejected as Strange Girl feels it may cause friction against their own studio's individuality and agency. Hot Pink then proposes a stripped down "partnership" where they say they could offer guidance and help prevent Strange Girl devs from getting burnt out, seemingly because Strange Girl are very open about working ruthlessly long hours on the project without rest. This partnership is rejected for similar reasons.
5. Strange Girl is largely funded by an unnamed investor, and so many of Hot Pink's other offers in these talks are rejected as they could cause issue with the primary investor. Negotiations appear to grind to a halt, and Hot Pink would later indicate that it became more difficult to get responses from Strange Girl as the week went on.
6. Hot Pink games files a warning through itch.io's systems, claiming that Strange Girl infringed on their ideas and assets. The use of copyright claims and automated warning systems has a history of violence and abuse on creator-focused websites such as youtube, and Strange Girl are immediately threatened by this behavior.
7. Strange Girl issues a public statement saying that as a result of this warning, they will be pausing production on Lovecraft Locker in order to focus on future games, but intend to come back to the project at a later date.
8. Hot Pink games states that posting their discussions publicly was distasteful and done in attempt to paint their studio in a bad light. The studios begin posting public comments talking with each other and with fans, defending themselves and their actions but not attacking one another.
9. Hot Pink states that they did not perceive their automated itch.io warning as an aggressive or threatening action. On a surface level, it appears that there is tension between the studios but not necessarily animosity.
10. Strange Girl comes to an agreement with Hot Pink to pay them monthly royalties and provide acknowledgement to Hot Pink within the game, in addition to changing their art style to be more distinct from Tentacle Locker, in exchange for taking down the warning and allowing them to continue development of Lovecraft Locker.
11. Though there are no longer impediments to continuing Lovecraft Locker, it is not yet clear whether Strange Girl will immediately return to it or pause it as they've initially stated in order to develop their new IP, Tentacle Fantasy Soda.

My own two notes on this are:

1. I hope Hot Pink is genuine when they say they did not understand the implication of threat when they issued a site warning against Strange Girl, but I also hope they go on to understand that this is not behavior that should taken lightly and has a history of misuse against smaller creators.
2. Hot Pink claims that their desire for a merger is partially to help prevent Strange Girl devs from getting burnt out. If they are true about their intentions, they are CORRECT. Strange Girl's development practices are CLEARLY unhealthy and CLEARLY unsustainable. I want both game studios to flourish, but Strange Girl very much needs to ease up, because it's clear to anyone with eyes that they will crash and burn if they keep crunching themselves like this, no matter how passionate they are.

We will have a public statement soon I think is the plan, but this does sum up things pretty well, but as you said not quite in a timeline, and I don't think we need to clarify the details. 
We did not think the report would cause such distress, and would have liked to issue later or not at all but did need to get things in writing. Itch has always been pretty personal with any reports, so did not perceive it as a threat at the time. With how they reacted we regetted the timing and have since issued an apology. Plus you make a good point about how other platform's reporting system can be weaponized. Lest we forget Annue's old twitter! 

We did consider, but never offered a merger. Partnership would be better way in my mind, but that didn't seem wanted either. So it will be an even more watered down cooperation you might say. If they don't want to take our advice they would never have to in any of these scenarios, but hopefully we can all succeed and yall get more games ;) 

Oh, and only deleting comments to try and breed less confusion! Hope it doesn't make more?? 

Hot Pink claims that their desire for a merger is partially to help prevent Strange Girl devs from getting burnt out. If they are true about their intentions, they are CORRECT. Strange Girl's development practices are CLEARLY unhealthy and CLEARLY unsustainable. I want both game studios to flourish, but Strange Girl very much needs to ease up, because it's clear to anyone with eyes that they will crash and burn if they keep crunching themselves like this, no matter how passionate they are.

We are now more aware of this matter. I have now discussed with my team to ease our progress and spend some time for leisure, rest, and research, instead of crunching new assets, programming, and other updates.

Though there are no longer impediments to continuing Lovecraft Locker, it is not yet clear whether Strange Girl will immediately return to it or pause it as they've initially stated in order to develop their new IP, Tentacle Fantasy Soda.

We plan to do an update for Lovecraft Locker at the end of the month. Fix some of the mechanics that have not been tested and are seems to be broken and not good in their current state. Onwards, we'll be working most of a month in the coming months for Tentacle Fantasy Soda, just to make sure our momentum doesn't burn and our hype and interest for it doesn't fade. We'll still be working on Lovecraft Locker in parallel, but not as much as before. It'll be something like if there are 4 weeks in a month, 3 weeks will be for TFS, and 1 week for LCL.