Mobile Esports (US:MGAM)2025-03-31 19:55Company Overview - MOGO was organized in March 2021 to expand the esports business initiated by SII in 2016, focusing on the South Asian markets, particularly India[16]. - The company is a development-stage entity with no significant revenues and a limited operating history since its organization in March 2021[72]. - The esports business operated by the company is the only one in India to organize and sponsor an officially-sanctioned national championship for university esports[137]. - The company is currently in a pre-revenue, early development stage, focusing on building infrastructure for revenue-producing initiatives[138]. Financial Performance - Revenue for the year ended December 31, 2024, was $25,409,000, a significant increase of $20,447,000 (approximately 412%) compared to $4,962,000 in 2023[144]. - The comprehensive loss for the years ended December 31, 2024, and 2023 was approximately $2,332,000 and $6,784,000, respectively[139]. - As of December 31, 2024, the accumulated deficit was approximately $10,643,000, compared to $8,323,000 as of December 31, 2023[139]. - The company expects to incur significant expenses and operating losses for the foreseeable future as it continues to implement its business plan[139]. - Net loss for 2024 was $2,328,295, a decrease of $4,450,961 (approximately 66%) compared to a net loss of $6,779,256 in 2023[144]. - Cash and restricted cash as of December 31, 2024, were approximately $929,000, down from $3,175,000 in 2023[148]. - Net cash used in operating activities for 2024 was approximately $2,107,000, a decrease of $1,467,000 from $3,574,000 in 2023[158]. - The company has an accumulated deficit of approximately $10,643,000 as of December 31, 2024, indicating ongoing financial challenges[166]. Business Strategy and Operations - MOGO's business strategy includes leveraging its relationships with universities and expanding its esports offerings in the region[18]. - MOGO will retain 20% of all Gross Receipts until it equals its distribution fee, followed by retaining further Gross Receipts until it covers all deductible costs[40]. - MOGO allocates the balance of net proceeds from commercialization of university esports as 60% to MOGO and 40% to SII[50]. - MOGO is responsible for all costs and expenses related to executing the business plan, including the creation and marketing of MOGO Games and Content[43]. - The company intends to use proceeds from the IPO and PIPE for operating expenses, marketing, and potential acquisitions of game licenses and technology platform agreements[156]. Market and Competitive Landscape - The competitive landscape is intense, with established companies having greater financial resources, which could hinder the company's ability to gain market share[79]. - The company must attract and retain mobile esports users and viewers, which may require costly marketing efforts[81]. - The esports industry in India faces regulatory scrutiny, with some states banning fantasy sports gambling, which could affect the company's operations[64]. - Economic downturns and adverse conditions in South Asian markets may negatively affect projected broadcasting and sponsorship revenues, which are contingent on consumer disposable income[92]. - Rising inflation and interest rates are likely to reduce disposable income in the company's markets, potentially leading to decreased revenues[93]. Legal and Compliance Risks - The company is not currently aware of any material legal proceedings that could adversely affect its business[85]. - Compliance with privacy laws and data protection regulations is critical, as failures could lead to significant liabilities and loss of customer trust[109]. - The company does not have business liability, disruption, or litigation insurance coverage for its operations in the US or India, exposing it to potential substantial costs[88]. Management and Governance - Management identified material weaknesses in internal controls over financial reporting, including a lack of necessary corporate accounting resources and ineffective risk assessment[190][189]. - The company’s management does not expect its disclosure controls or internal controls to prevent all errors and fraud[188]. - The company has adopted a written code of business conduct and ethics applicable to its directors, officers, and employees[203]. - The Company does not currently have an established Equity Compensation Plan[213]. Shareholder Information - As of December 31, 2024, the company had 27,936,503 shares of common stock outstanding[209]. - The total beneficial ownership of all directors and executive officers is 6,270,000 shares, which is 22.4%[211]. - Brett Rosin, CEO, owns 5,000,000 shares, accounting for 17.9% of total shares[211]. - Armistice Capital Master Fund, Ltd. holds 1,886,793 shares, representing 6.8% ownership[211]. Related Transactions and Fees - Related person transactions exceeding $120,000 in any fiscal year are subject to review and approval by the audit committee[214]. - The fees paid to the auditor included expenses for audit and reviews of consolidated financial statements[216]. - The Company paid its current CEO approximately $24,000 and issued him 5,000,000 shares valued at approximately $30,000 during 2024[208]. - The Company paid the Board Chairman $96,000 for consulting services in 2024, up from $10,000 in 2023[215].