In a major update from the ASX today, the indie game developer said it would undertake an equity offering to raise $7 million in working capital and break even in cash flow. ‘here is the third quarter of this fiscal year.
The company’s ASX fundamentals show a net loss of $7.14 million. Mighty Kingdom’s share price also fell from its initial price of $0.26c when it listed in April 2021 to $0.04c when it halted trading on Monday.
“As part of this capital raising process, the company is undertaking a significant refocusing and restructuring of its business plan, management and board of directors with the goal of creating value for shareholders” , says the ASX announcement.
“MK will focus on deliverability and accountability against this polished business plan as the Adelaide-based group seeks to cement its position as one of the country’s largest game developers.”
After a period that has been very disappointing from both a corporate and shareholder perspective, this restructuring and capital increase represents a very significant change in Mighty Kingdom’s future prospects.
The market reacted positively to today’s announcement, with the company’s share price rising 18% to $0.045c after trading resumed this morning.
The restructuring plan comes after Mighty Kingdom’s June quarter cash flow report released on Friday saw it report total funding available for future operating activities at $3.96 million – enough to maintain it for just over three months, according to the report.
The poor result meant the company had to answer questions about its financial condition and the sustainability of its operations.
Mighty Kingdom said it expects its free operating cash flow to improve over the next six months “due to expected revenue growth and cost reduction starting next quarter. “.
“Mighty Kingdom has been working on a number of solutions to ensure the continuity of its operations and achieve its strategic objectives, including…making decisive changes in the business to focus on revenue generation and cost reduction. “, says the June report.
Mighty Kingdom, Adelaide’s biggest indie game developer, which mainly focuses on mobile titles, has reported a lot of misfires this year.
Sales of its first console game, “Conan Chop Chop”, fell short of expectations, and the company also ceased development of the mobile game Ava’s Manor after reviewing the product’s financial results.
A Mighty Kingdom spokesperson said InDaily that delays in game launches had also impacted the business.
“Mighty Kingdom has invested heavily in resources and technology to rapidly scale the business,” the spokesperson said.
“Delays in the launches of certain titles have put pressure on the company.
“Mighty Kingdom is confident that the business is on the right track and that this current increase and refocusing of business will lead to strong results.”
Mighty Kingdom’s cash flow report in June said its initial intellectual property initiatives were being “reassessed and redefined” to ensure the company was “successfully delivering on its long-term strategy.”
Mighty Kingdom chief executive Phil Mayes conceded to the ASX this morning that it has been a disappointing period for the company.
“After a period that has been very disappointing from both a corporate and shareholder perspective, this restructuring and fundraising represents a very significant change in Mighty Kingdom’s outlook for the future,” he told the ASX.
“We are now focused on revenue in building a sustainable business that will allow us to have options moving forward.
“With some significant new shareholders and directors who can help us along this path, we anticipate a much more successful FY23.”
The company today announced the appointment of three new entertainment industry board members to help with the restructuring process and provide “accountability to expectations.”
Former Fremantle Media CEO Ian Hogg, former WIN Corporation boss David Butorac and Done+Dusted COO Melanie Fisher will now sit on Mighty Kingdom’s board, which is chaired by the former ABC General Manager Michelle Guthrie.
Mighty Kingdom COO Tony Lawrence has stepped down as a non-executive director but remains with the company.
According to Mighty Kingdom’s June quarter report, personnel costs are by far the company’s biggest expense, accounting for more than $14.5 million in expenses in the prior fiscal year. The company says it employs over 160 developers.
InDaily asked the company if its announced cost-cutting measures would lead to layoffs and if it could guarantee that employees would not lose their jobs.
In response, a spokesperson said, “Mighty Kingdom has conducted a review and made some changes to help the management team focus on achieving our goals.”
“People are our biggest cost, but it’s also thanks to them that we generate income.
“Our goal is to increase revenue to achieve that goal, which means we need people to generate that revenue.
“Achievement of this goal will be driven by increased interest from Tier 1 counterparties seeking Mighty Kingdom’s work-for-hire capability.”
Mighty Kingdom received a state government grant of $480,000 in 2018 to hire 16 staff and develop “Kitty Keeper” – a game the company has dubbed “the biggest indie game ever made in South Africa”, although it was removed after less than two years. the world market.
The company was founded in 2010 and listed on the ASX in April 2021. It is currently based on King William Street.
Mighty Kingdom has called an extraordinary general meeting to be held in mid-September this year.
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