Game developer Mighty Kingdom could borrow against future R&D rebates to keep the lights on

Former ABC managing director Michelle Guthrie.

The Michelle Guthrie-chaired game developer Mighty Kingdom could look to borrow against future research and development rebates in order to keep the lights on as it seeks to recoup $2m in unpaid capital raise funds.

The embattled mobile game developer is locked in a fight with its former chief executive Shane Yeend, who held that title for just four months before resigning in early September.

Mr Yeend’s company Gamestar led a $7m capital raise at 3.5c per share in August last year, but Mighty Kingdom says it’s still waiting on $2m of the $4m or so committed by Gamestar.

The game developer says all conditions have been met for the money to be paid, while Mr Yeend disputes this.

Mighty Kingdom recently hired on top tier Adelaide law firm LK Law to handle the matter.

Meanwhile the company has set out in its annual report how it intends to continue operating should the money not be forthcoming, also revealing Ms Guthrie loaned it $200,000 in July on an unsecured, interest free basis, to be repaid before the end of the current financial year.

Ms Guthrie, who was paid $138,000 including superannuation contributions last year to chair the company, has a considerable interest in its success, owning 14.2 million shares and another 649,000 options.

Ms Guthrie is a former ABC managing director and has held senior technology roles at companies such as Google.

Mighty Kingdom, in its full year results released in late August, said it was on the turnaround path, with a much-reduced cost base and record gaming revenue of $6.9m, after learning some “hard lessons” in its first two years as a public company.

It remains in a finely balanced financial position however, and indicated in its annual report released in recent days that it might seek to raise additional capital should the Gamestar funds not come through.

One strategy which it has employed recently is to borrow against expected R&D tax rebates, with Mighty Kingdom in August securing a loan of $1.2m from Radium Capital at a 16 per cent interest rate, with the amount constituting 80 per cent of its expected rebate for FY23.

The company said it continues to pursue financing arrangements “to bring forward expected refunds against government rebates for FY23 and FY24’’.

If the various strategies in the company’s turnaround and funding plan for this year do not go as planned, Mighty Kingdom warned there was a “material uncertainty’’ about its ability to continue as a going concern.

The company floated at an issue price of 30c in 2021 after raising $18m, however burned through that cash quickly with high employee costs understood to be a key factor.

The shares were changing hands for 1.2c on Tuesday.