The CEO of Michelle Guthrie-chaired Mighty Kingdom, who owes $2m-plus on shares, has quit

The chief executive of Michelle Guthrie-chaired Mighty Kingdom has quit amid a dispute over more than $2m in capital raise funds he is yet to pay into the company.

Shane Yeend, chief executive of Mighty Kingdom.

Shane Yeend, the chief executive of Michelle Guthrie-chaired game developer Mighty Kingdom, has quit amid a dispute over more than $2m in capital raise funds he is yet to pay into the company.

Mighty Kingdom released its financial results this week, and buried in the detail was the revelation that Mr Yeend’s company, Gamestar Studios, was yet to pay more than $2m for shares issued as part of a capital raising in August last year.

Mr Yeend’s name did not appear anywhere in the company’s financial report and he was not listed as a contact on the accompanying press release lodged on Thursday.

When contacted by The Australian on Thursday he said there was a legal dispute over the capital raise funds, and that he had already quit the company via text message and email.

On Friday morning Mighty Kingdom told the ASX that Mr Yeend had tendered his resignation the previous night.

“Post market closure on the 31st August the board received and accepted this resignation with Mr Yeend stepping down from his responsibilities in this role with immediate effect,’’ the company said.

“Mighty Kingdom will continue to work with Mr Yeend in his role as chairman and CEO of Gamestar+ to resolve issues around outstanding obligations with respect to their remaining circa $2.1m tranche two placement commitment and will advise investors of any material developments with respect to this process.’’

Gamestar is the largest shareholder in the Adelaide-based Mighty Kingdom, with a 32 per cent stake.

The money owed by Mr Yeend’s company relates to a capital raising announced more than a year ago, when Mighty Kingdom told the ASX it had received commitments for a $7m placement, allowing the company to restructure following heavy losses since listing in April, 2021.

Mr Yeend’s Gamestar Interactive Inc was brought on to the share register as part of the raise, with Mighty Kingdom telling the ASX at the time that Gamestar had “closed its first seed round at a $57.2m valuation in November, 2021’’.

Former ABC managing director Michelle Guthrie.

Mr Yeend was also appointed chief executive of Mighty Kingdom in May this year, with a nominal “consulting fee” of $1 to be paid, and subject to shareholder approval, 12 million share options with a strike price of 8c with a two year expiry term.

“I am inspired by Mighty Kingdom’s opportunity in digital gaming to expand on the global stage right here in Adelaide,’’ Mr Yeend was quoted as saying at the time.

“I believe Mighty Kingdom is the perfect vehicle to grow a global gaming business.

“It has only scratched the surface of its incredible potential and I am thrilled to lead the company in its next chapter of growth.’’

Gamestar was described in that ASX release as developing the “Netflix of game night”, and said it had struck a partnership with celebrity Steve Harvey from the US version of Family Feud.

“The TV-first games business has deals with some of the biggest brands and talent in the world,’’ Mighty Kingdom said.

Mr Yeend’s company did contribute the first $2m of the capital raise money owed, he told The Australian, which was confirmed by Mighty Kingdom.

The company’s financial report, while not mentioning Mr Yeend by name even once, does mention a “related party receivable” of $2.28m owed by Gamestar Studios for 65,371,429 shares.

“As the company announced to the market on June 14, 2023, all conditions to that payment have been met which created an unconditional right to receive payment,’’ the company says.

“The company has been expecting settlement of that commitment. On July 20, 2023, the company received $200,000 as partial settlement of this receivable.

“The company is currently in the process of resolving the timing of the settlement of the balance of payment from Gamestar Studios.

“Based on the information available to the company, the company is not aware of any reason why it is not able to reasonably form the view that the outstanding amount will be received by the company in full.’’

Mr Yeend has in the past advocated for a commercial helipad in the Adelaide CBD.

Mr Yeend is the sole director of Gamestar Studios which is wholly-owned by Gamestar Interactive Inc.

Mr Yeend said on Thursday “there are some issues over conditions being met and it’s a legal issue” with regard to the outstanding money.

“It is what it is,’’ he said.

“You might not know this yet but I actually resigned as CEO.

“I only took the job for $1 to help control the costs in the business.’’

Mr Yeend said he had tried to come in and save the business which was bleeding money.

“It hasn’t worked out so well.’’

Mr Yeend said Gamestar was a “great start up doing great things”.

He also said Mighty Kingdom had been contracted by his companies in March to deliver a game that “hasn’t been delivered yet’’.

Mr Yeend was himself chief executive of Mighty Kingdom for all but two months of this period.

“The ASX shell is an interesting option for a global gaming roll up but things just haven’t worked out the way they should have I guess,’’ he said.

Ms Guthrie said in the statement issued to the ASX on Friday that: “We wish Mr Yeend well in his future endeavours’’.

“Thanks to our executive team, Mighty Kingdom is in its best ever position and the outlook for the company is strong. With our financials now showing there is real sustainability around our core studio business, we are looking forward to successful FY24”.

Mighty Kingdom posted a full year loss of $9.1m down 16 per cent, on revenue of $6.9m, up 42 per cent.

“With significant advances being made as a result of the company’s business restructure, the focus for FY24 will be on driving revenue growth while retaining a strong focus on maximising utilisation of the developer team,’’ the company told the ASX.

“Mighty Kingdom’s realignment of it’s cost base allows the business to resource new contracts without facing unsustainable ongoing costs.

“Many hard lessons have been learnt during the first two years of Mighty Kingdom being an ASX listed company and this new approach will deliver the upside promised in the past without the excessive cash burn experienced in prior financial years. ’’

Mighty Kingdom shares were trading 16.6 per cent lower at 1.5c. The company floated at an issue price of 30c in 2021 after raising $18m.