In a short update to shareholders posted this morning, Mighty Kingdom said it had terminated its share subscription agreement with former CEO Shane Yeend’s Gamestar Studios.

In addition, the listed video game developer said it was still working with its lawyers to recover $2.1 million it alleges was outstanding from Gamestar – Mighty Kingdom’s largest shareholder.

“Noting Gamestar+’s ongoing failure to meet its obligations in settling payment of circa $2.1m for a shareholder approved placement of ordinary shares at $0.035, the company has reserved its rights against Gamestar+ in relation to the outstanding placement,” Mighty Kingdom said today.

“Mighty Kingdom will continue to work with its legal advisors around assessing recovery options that are aligned to the best interests of all shareholders.”

The company employed specialist dispute resolutions advisers LK Law in September.

At the time, Mighty Kingdom said the funds had “not been forthcoming”, with the announcement released 18 days after Gamestar founder Shane Yeend stepped down as CEO of Mighty Kingdom.

The now-terminated share subscription agreement was entered into by Mighty Kingdom and Gamestar back in August 2022, which gave Yeend’s firm a major chunk of the embattled games company.

In a statement sent to InDaily in September, Yeend alleged Mighty Kingdom was in breach of its share subscription agreement with Gamestar Studios and that he had been trying to “get this deal completed for the sake of the game industry in Adelaide in good faith at all times”.

Following the appointment of LK Law, Mighty Kingdom named Simon Rabbitt as the company’s interim CEO.

Most recently, the business has been mulling a “whole or partial divestment” of Mighty Kingdom as part of a review of the business for “future growth and development”.

It also announced a $1 million capital raise at the same time, with funds for “working capital requirements while the company continues to pursue new, higher-return opportunities”.

Founded in 2010, Mighty Kingdom predominately makes licenced video games for mobile including Star Trek Lower Decks: The Badgey Directive, Conan Chop Chop and Gabby’s Dollhouse.

Aided by $2 million of state government funding, the company established a games development hub in the Adelaide CBD in 2017.

The business has been hit hard on the share market over the past two years due to the underperformance of its titles, and in 2021 the Auditor-General was asked to review allegations about control of intellectual property and the company’s use of $480,000 in government funds.

The firm laid off an undisclosed number of staff about a year ago following ‘disappointing’ results, which also led to a change in leadership with founder and CEO Phillip Mayes stepping down in January this year.