One of Australia’s few gaming development Companies is desperately chasing a cash injection, as gaming PC sales slow and game developers struggle to find a market for their product, they are also involved in a messy fight with one of their investors and having mounting losses.

Mobile developer Mighty Kingdom, who back in 2021 filed a Public Offering on the Australian Securities Exchange that raised $18 million is now struggling with Chairman and former ABC CEO Michelle Guthrie seen below, now chasing investors after the Company market cap fell from $46M when they raised the $18M to just $4 today.

When the business last raised capital, they had 110 key staff this has been slashed as the business attempt to secure the funding it needs to avoid going bust.

The business claims that they have had “unsolicited expressions of interest” in the company.

The big question is why not simply sell Mighty Kingdom if they have interest as video games industry investment has dried up with several gaming development Companies struggling.

According to the AFR, Adelaide businessman and major shareholder Shane Yeend is in a messy fight with the Company over a $2 million payment for shares.

Mighty Kingdom is also trying to pay back a $1.3 million loan (at 16 per cent interest) that it borrowed against its future R&D tax grant.

In the past they have bragged about working for international companies including Sony, Disney and LEGO, Disney is also struggling.

The problem for the business is that revenues have failed to materialise from Mighty Kingdom’s video game plans, and sales of many of its co-developments disappointed as those Companies faced their own battles.

Mighty Kingdom is claiming $2.5 million in revenue, but the financials show that they have losses of $3.5 million coupled with a $2 million tax debt.

What’s not known is what plan is in place with the ATO to service the tax debt with the ATO recently moving to place several Companies into liquidation or administration who they believe are most likely to be unable to repay their ATO debt.

According to the AFR as interest rates began to rise and loss-making tech companies fell out of investor favour, Mighty Kingdom was forced to raise capital several times to stay solvent with interest rates climbing to 16% which on their latest financials appears to be only delivering losses.

Since the capital raising losses have blown out to $10 million.

Shane Yeend, major shareholder of Mighty Kingdom, has been agitating for cost savings.

Mr Yeend, founder of Gamestar Studios, emerged as a major shareholder in August 2022, adding another strong voice about future strategy.

Back in December 2022 Mighty Kingdom agreed to transfer 12 million shares to Mr Yeend in return for $4 million, broken into two tranches.

The two parties signed a shareholder subscriber agreement.

As per the agreement, Mighty Kingdom embarked on a cost-cutting program and fired a wave of developers, promising investors it would save $350,000 a month.

The only problem is the strategy that was in place at the time has gone pear shaped with insiders claiming that the business is in “serious trouble”.

Yeend who controlled about 32 per cent of the shares became CEO, since then he has quit.

Current Mighty Kingdom management claim that Yeend’s investment company, Gamestar Studios, had failed to pay $2.1 million for the second tranche of shares he received.

But Mr Yeend argued Mighty Kingdom had failed to rein in costs as per the share subscription agreement.

Observers claim that the real risk is that the Adelaide based Company will run out of money completely before they can be rescued.

It accepted a $1.3 million loan from Radium Capital, an Adelaide-based lender that provides cash against future research and development tax credits.

The $1.3 million loan was against 80 per cent of Mighty Kingdom’s 2023 R&D tax rebate. According to its ASX filings for the two preceding years, Mighty Kingdom regularly claimed just over $1 million a year.

In September, Mighty Kingdom hired lawyers to chase down the $2.1 million claims the AFR.