Former Google Play exec to lead Mighty Kingdom as game developer rattles tin for $6.2m

Adelaide-based game developer Mighty Kingdom (ASX: MKL) has hit play on a $6.2 million capital raising drive following deliberations with a consortium of leading Australian gaming executives in a bid to turn the company's fortunes around, appointing former Google Play exec David Yin as its new CEO effective immediately.

The news follows a failed board spill in January led by substantial shareholder and former CEO Shane Yeend of Gamestar, which had entered into a agreements with Mighty Kingdom as part of a restructuring in 2022 but has been accused of owing the company $2.4 million in unpaid shares and game development work.

Yeend, a seasoned entertainment and gaming industry entrepreneur, took over leadership of Mighty Kingdom in May 2023 after founder Philip Mayes stepped aside from the CEO role, but he only held the position for four months before resigning in September.

Within three months Yeend would lead a successful campaign to oust Mighty Kingdom chair and former ABC boss Michelle Guthrie.

Mighty Kingdom has struggled to stem its cash outflows with retained losses of $33.8 million by the end of FY23, and by the close of the calendar year it had just $600,000 in cash to its name - a figure aided significantly by a $1.89 million Federal Government R&D incentive, continued game revenue growth and ongoing cost reductions. 

Since receiving unsolicited offers in October the group has undertaken a strategic review, culminating in a consortium signing a letter of intent (LOI) with Mighty Kingdom in December to appoint new directors. 

Yin is part of that consortium, and has held various senior roles at Google Play Australia-New Zealand and South East Asia between 2015 and 2020, including head of development leading growth strategies with major mobile game studios and managing more than $100 million in annual revenue.

He then led Storms Gaming Studio, a developer of owned intellectual property (IP) games and third-party games, which was acquired by Melbourne-headquartered iCandy Interactive (ASX: ICI) in 2022.

Others in the group now appointed to the board including Mark Aubrey, former managing director of Activision Blizzard King (ABK) APAC, and Chris Whiteman, who sits on the board of both Animoca Brands and iCandy.

As part of today's board announcements, interim CEO Simon Rabbitt will return to his role as CFO and COO, while Mighty Kingdom founder Philip Mayes will leave the board altogether, having stepped back in to assist with the strategic review process.

The refreshed leadership at Mighty Kingdom aims to achieve gaming profitability break-even by the first half of FY25, achieving financial independence and operating stability within six months. The company is targeting a diversification away from its current reliance on work-for-hire contracts to a more balanced mix of operations that also includes joint game development and sole-risked initiatives.

Doing this with such a low cash balance requires an influx of capital, so the company has announced a $6.2 million raise via an accelerated renounceable entitlement offer at a ratio of 5 new fully paid ordinary shares for every share held.

The raise price of $0.003 per share represents a massive 63.5 per cent discount to the last closing price for MKL shares on 8 March, and will result in the issue of approximately 2.1 billion shares.

This is 500 per cent of the current issued share capital, and the $6.2 million target is roughly double Mighty Kingdom's market capitalisation prior to the announcement. 

The developer reports that $1 million from the offer will go towards immediate one-off restructuring costs, $3 million will be for working capital against existing projects to allow for cash flow management against variable billing cycles, and $2 million will be for working capital to allow for balance sheet requirements in generating new project revenue and mitigating risk against existing projects in the event of negative industry movements.