Mobile Esports (MGAM) - 2022 Q3 - Quarterly Report

Part I. Financial Information This section details the company's financial position, operating results, and cash flows, highlighting its pre-revenue stage and significant capital infusion from financing activities Condensed Financial Statements The company is in a pre-revenue stage, reporting a net loss of $547,889 for the nine months ended September 30, 2022, with its financial position significantly strengthened by an IPO and a private placement, resulting in cash and cash equivalents of $9.47 million Condensed Balance Sheets The balance sheet reflects a substantial increase in cash and total assets primarily due to proceeds from the Initial Public Offering and a private placement Balance Sheet Highlights (unaudited) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $9,469,521 | $238,202 | | Total current assets | $9,635,546 | $301,200 | | Total Assets | $9,935,546 | $301,200 | | Liabilities & Equity | | | | Total current liabilities | $188,146 | $31,814 | | Total stockholders' equity | $9,747,400 | $269,386 | | Total Liabilities and Stockholders' Equity | $9,935,546 | $301,200 | - The significant increase in cash and total assets is primarily due to proceeds from the Initial Public Offering (IPO) and a private placement that occurred in 2022[14][51] Condensed Statements of Operations The company generated no revenue during the reported periods, with the net loss increasing significantly due to higher general and administrative expenses Operating Results (unaudited) | Period | Revenue | General & Admin Expenses | Net Loss | Net Loss Per Share | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30, 2022 | $0 | $369,302 | $(370,624) | $(0.02) | | Nine Months Ended Sep 30, 2022 | $0 | $546,567 | $(547,889) | $(0.03) | - The company generated no revenue during the reported periods, with the net loss increasing significantly, driven by higher general and administrative expenses as the company scaled its operations post-inception[16] Condensed Statements of Cash Flows Financing activities were the primary source of cash, driven by proceeds from the issuance of common stock in an IPO and a private placement, while cash was used for software development Cash Flow Summary for the Nine Months Ended Sep 30, 2022 (unaudited) | Activity | Cash Flow | | :--- | :--- | | Net cash used by operating activities | $(371,885) | | Net cash used by investing activities | $(300,000) | | Net cash provided by financing activities | $9,903,204 | | Net increase in cash and cash equivalents | $9,231,319 | - Financing activities were the primary source of cash, driven by net proceeds from the issuance of common stock in an IPO and a private placement, totaling approximately $9.9 million[22][83] - Cash used in investing activities consisted of a $300,000 advance payment to a supplier for software development[22][45] Notes to Financial Statements The notes detail the company's incorporation, its rights to commercialize esports events in India, significant capital raises through an IPO and PIPE, and commitments for platform development - The company was incorporated in March 2021 and has rights to commercialize esports events for 76 universities in India[23] - In July 2022, the company raised gross proceeds of $6.9 million through an IPO, and in September 2022, it raised an additional $5.0 million through a private equity placement (PIPE)[51] - The company has committed to a total cost of $1,200,000 for the development of an Esports Platform, with $300,000 paid as of September 30, 2022[45] - In October 2022, the company established a subsidiary in India, MOGO Esports Pvt Ltd, for which operations have not yet commenced[43] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's formation to expand an existing esports business in India, focusing on university-level competitions, noting its pre-revenue stage with an accumulated deficit of approximately $800,000, and operations financed through an IPO and a PIPE, which raised combined net proceeds of approximately $9.89 million, believed sufficient for about two years of operational needs, with the increase in net loss attributed to higher G&A expenses as the company builds its infrastructure Overview and Recent Events The company was formed in March 2021 to expand an esports business in India, currently operating at a deficit, and has recently secured significant funding through an IPO and PIPE - The company was formed in March 2021 to expand an esports business started by Sports Industry of India (SII) in 2016, focusing on the Indian university esports market[60] - As of September 30, 2022, the company had an accumulated deficit of approximately $800,000 and expects to incur significant expenses and operating losses for the foreseeable future[63] Recent Financing Activities (2022) | Event | Gross Proceeds | Net Proceeds | | :--- | :--- | :--- | | IPO (July 2022) | $6,900,000 | ~$5,465,000 | | PIPE (September 2022) | $5,000,001 | ~$4,422,000 | Results of Operations The company has not generated any revenue to date, and general and administrative expenses have significantly increased due to scaling operations and public company costs - The company has not generated any revenue or cost of revenue to date[67] - General and administrative expenses for the nine months ended Sep 30, 2022, were $546,567, a significant increase from $28,985 in the prior period, driven by increased payroll, insurance, public company costs, professional fees, and approximately $139,000 in non-cash expense for warrants issued for services[72] Liquidity and Capital Resources The company's cash position significantly improved due to substantial proceeds from financing activities, which management believes will be sufficient for approximately two years of operations - As of September 30, 2022, the company had cash and cash equivalents of $9,469,521, up from $238,202 at the end of 2021[73] - Management believes the net proceeds from the IPO and PIPE will be sufficient to meet cash and operational requirements for approximately two years[75] - Net cash provided by financing activities was $9.9 million for the nine months ended Sep 30, 2022, primarily from the IPO and PIPE, compared to $0.31 million in the prior period from common stock sales[83] Quantitative and Qualitative Disclosures About Market Risk The company states that this item is not applicable, indicating it does not have significant exposure to market risks such as interest rate risk, foreign currency exchange risk, or commodity price risk at this stage - The company has determined that quantitative and qualitative disclosures about market risk are not applicable for this reporting period[88] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2022, with no material changes to internal control over financial reporting identified during the quarter - Based on an evaluation as of September 30, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[89] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[90] Part II. Other Information This section covers the company's legal status, identifies key business risks, and lists the exhibits filed with the quarterly report Legal Proceedings The company reports that it is not currently subject to any material legal proceedings or claims - The company is not currently subject to any legal proceedings or claims[91] Risk Factors The company identifies numerous risks associated with its development-stage business, including market acceptance uncertainty, reliance on a limited license, dependence on third-party technology, regulatory challenges, and the need for future financing - The business is a development-stage company with a limited operating history and no guarantee of achieving profitability[107] - The company will require additional financing to fully fund its business plan, and there is no certainty such financing will be available on reasonable terms[111][112] - The business relies on a license from Sports Industry of India (SII) for rights to 76 Indian universities, which is limited in scope and term, and subject to risks such as universities withdrawing or SII defaulting on its obligations[99][101][103] - Operations are concentrated in India, exposing the company to regulatory uncertainty (especially regarding games of skill vs. chance), political instability, and foreign currency exchange risks[96][98][133] Exhibits This section lists the exhibits filed with the quarterly report, including officer certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and the financial statements formatted in iXBRL - The exhibits filed with the Form 10-Q include CEO and CFO certifications and interactive data files (iXBRL)[162][164]