MOBILE GLOBAL ESPORTS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)


You should read the following discussion and analysis of our financial condition
and results of operations together with our condensed financial statements and
related notes appearing in this Quarterly Report on Form 10-Q. This discussion
and other parts of this Quarterly Report contain forward-looking statements that
involve risks and uncertainties, such as statements of our plans, objectives,
expectations and intentions. As a result of many factors, including those
factors set forth in the "Risk Factors" section of this Quarterly Report, our
actual results could differ materially from the results described in, or implied
by, the forward-looking statements contained in the following discussion and
analysis.



Overview



Mobile Global Esports Inc. ("MOGO" or "Mogo," or the "Company") was organized in
March of 2021 to expand an esports business created by Sports Industry of India
("SII"), and conducted since 2016. Through a series of contracts, the rights to
the business were assigned to MOGO by SII and its affiliates beginning in
October of 2021. MOGO is now expanding the business created by SII, which is
focused on the rapidly-growing esports industry. The Indian market for esports,
and particularly university esports events in India, represent, in management's
opinion, one of the largest and fastest growing esports markets in the world.



The SII esports business, which has now been transferred to and is operated by
MOGO, is the only business in India to organize and sponsor an
officially-sanctioned national championship for university esports. As of
November 7, 2022, SII holds a 13.0% minority common share interest in MOGO, but
has no controlling interest in MOGO.



Esports are the competitive playing of video games by amateur and professional
teams for cash and other prizes. Esports typically take the form of organized,
multiplayer video games that include real-time strategy and competition,
including virtual fights, first-person shooter and multiplayer online battle
arena games. Esports are defined as competitive games of skill, timing,
knowledge, experience, practice, attention and teamwork, but not games of chance
or luck. Mobile esports are defined as esports that are streamed on an
electronic esports platform and played by individuals or teams on mobile
devices, usually smartphones. Competitors participate at large in-person events,
small in-person events and virtually from home or computer cafes.



Since our inception, we have incurred operating losses. Our net loss was
approximately $548,000 for the nine months ended September 30, 2022 and $262,000
for the period from March 11, 2021 (Inception) through December 31, 2021. As of
September 30, 2022, we had an accumulated deficit of approximately $800,000. We
expect to incur significant expenses and operating losses for the foreseeable
future as we continue to implement and execute our business plan and expand our
business. We raised approximately $9,887,000 of net proceeds from our initial
public offering ("IPO") and private equity placement in August and September
2022 but we believe we will likely require additional capital beyond this
offering if our business is to be successful.



Recent Events


Issuance of Common Stock in IPO




During July 2022, we issued 1,725,000 shares of common stock for total gross
proceeds of $6,900,000 through an initial public offering ("IPO"). We received
net proceeds after commissions, fees and expenses of approximately $5,465,000,
with $500,000 of these funds currently held in an escrow account for our
benefit.



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Issuance of Common Stock and Warrants in PIPE




During September 2022, we issued 1,886,793 units, each consisting of one share
of common stock and one warrant for a total of 1,886,793 shares of common stock
and 1,886,793 warrants to acquire our common stock in the future for total gross
proceeds of $5,000,001 through a private equity placement agreement ("PIPE"). In
conjunction with this issuance of common stock, 1,886,793 warrants ("PIPE
Warrants") to purchase common stock were issued to the investors having an
exercise price of $2.90 per share and 339,623 warrants ("Placement Agent
Warrants") were issued to the placement agent as a part of their fee, having an
exercise price of $2.915 per share. The Company received net proceeds, after
commissions, fees and expenses of approximately $4,422,000.



Components of Statements of Operations



Revenue and Cost of Revenue


We have not generated any revenue or cost of revenue to date.

General and Administrative Expenses

General and administrative expenses consist principally of event marketing and
development fees, and other professional fees for consulting, legal, auditing
and tax services.



Critical Accounting Estimates



We discussed our accounting policies and significant assumptions used in our
estimates in Note 2 of our audited financial statements included in our Form S-1
Registration Statement, as amended ("Form S-1"). There have been no material
changes during the three and nine months ended September 30, 2022 to our
critical accounting policies, significant judgments and estimates disclosed
in
our Form S-1.



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Results of Operations


Three and Nine Months Ended September 30, 2022 compared with the Three Months
Ended September 30, 2021 and the period from March 11, 2021 (Inception) to
September 30, 2021, respectively




The following table summarizes the results of our operations for each of the
three and nine month periods ended September 30, 2022, and the three months
ended September 30, 2021 and the period from March 11, 2021 (Inception) to
September 30, 2021, together with the changes in those items in dollars and as
a percentage:



                        Three Months Ended                                        Nine Months Ended
                          September 30,               $              %              September 30,               $              %
                        2022          2021          Change        Change          2022          2021          Change        Change
Revenue              $        -     $       -     $        -             *     $        -     $       -     $        -             *
Costs and
expenses:
Cost of revenue               -             -              -             *              -             -              -             *
General and
administrative          369,302        28,835        340,467            **        546,567        28,985        517,582            **
Total costs and
expenses                369,302        28,835        340,467            **        546,567        28,985        517,582            **
Loss from
operations             (369,302 )     (28,835 )     (340,467 )          ** 

(546,567 ) (28,985 ) (517,582 ) **
Interest expense (1,322 )

           -         (1,322 )          **         (1,322 )           -         (1,322 )          **
Net loss             $ (370,624 )   $ (28,835 )   $ (341,789 )          ** 
   $ (547,889 )   $ (28,985 )   $ (518,904 )          **




* Not meaningful



** Change is significantly more than 500%

General and Administrative Expenses




General and administrative expenses were $369,302 for the three months ended
September 30, 2022, compared with $28,835 for the three months ended September
30, 2021. The increase of $340,367 was primarily due to the increase in payroll
and related expenses, insurance expense, public company filing fees, and other
professional fees for consulting, legal, auditing and tax services, including
approximately $46,000 of non-cash expense related to warrants issued for
services. General and administrative expenses were $546,567 for the nine months
ended September 30, 2022, compared with $28,985 for the period from March 11,
2021 (Inception) to September 30, 2021. The increase of $517,582 was primarily
due to the increase in payroll and related expenses, event marketing and
development fees, insurance expense, public company filing fees and other
professional fees for consulting, legal, auditing and tax services, including
approximately $139,000 of non-cash expense related to warrants issued for
services.



Liquidity and Capital Resources

As of September 30, 2022 and December 31, 2021, we had cash and cash equivalents
of $9,469,521 and $238,202, respectively.




We have financed our operations through the issuance of common stock and common
stock with warrants. In July 2022, we issued 1,725,000 shares of common stock
for total gross proceeds of $6,900,000 through an initial public offering
("IPO"). We received net proceeds after commissions, fees and expenses of
approximately $5,465,000, with $500,000 of these funds currently held in an
escrow account for our benefit. In September 2022, we issued 1,886,793 shares of
common stock along with 1,886,793 warrants, for total gross proceeds of
$5,000,001 through a private equity placement ("PIPE"). We received net proceeds
after commissions, fees and expenses of approximately $4,422,000.



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Funding Requirements


We believe the net proceeds of the IPO and the PIPE will be sufficient to meet
our cash, operational and liquidity requirements for approximately two years.




We cannot specify with certainty all of the particular uses for the net proceeds
to us from the IPO and the PIPE. Accordingly, our management will have broad
discretion in the application of these proceeds.



We intend to use the net proceeds from the IPO and the PIPE for operating
expenses, marketing, event expenses, streaming, retention of additional staff in
India, working capital and general corporate purposes, including perhaps
acquisitions of game licenses, technology platform agreements and strategic
partnerships. Investors are cautioned, however, that expenditures may vary
substantially from these uses. Investors will be relying on the judgment of our
management, who will have broad discretion regarding the application of the
proceeds of the IPO and the PIPE. The amounts and timing of our actual
expenditures will depend upon numerous factors, including the amount of cash
generated by our operations and the amount of competition we face and other
operational factors. We may find it necessary or advisable to use portions of
the proceeds from the IPO and the PIPE for other purposes.



Because of the numerous risks and uncertainties associated with establishing a
new business in India, we are unable to estimate the exact amount of our working
capital requirements. Our future funding requirements will depend on many
factors, including:



    ?   Failure of future market acceptance of our mobile esports products and
        services;




  ? Increased levels of competition;




? Changes in political, economic or regulatory conditions generally and in

        the markets in which we operate;



? Our ability to retain and attract senior management and other key employees;

? Our ability to protect our trade secrets or other proprietary rights,

operate without infringing upon the proprietary rights of others and

prevent others from infringing on the proprietary rights of the Company;

        and



? Other risks, including those described in the “Risk Factors” discussion.

See “Risk Factors” for additional risks associated with our substantial capital
requirements.



Cash Flows



The following table summarizes our sources and uses of cash and cash
equivalents:



                                                Nine Months Ended
                                                  September 30,
                                               2022           2021

Net cash provided by (used in):
Operating activities                        $  (371,885 )   $ (25,235 )
Investing activities                           (300,000 )           -
Financing activities                          9,903,204       310,824

Net increase in cash and cash equivalents $ 9,231,319 $ 285,589




Operating Activities



Net cash used in operating activities increased $346,650 for the nine months
ended September 30, 2022. The increase was primarily due to an increase in
general and administrative expenses during the nine months ended September 30,
2022 compared with the period from March 11, 2021 (Inception) to September
30,
2021.



Investing Activities



Net cash used in investing activities increased $300,000 for the nine months
ended September 30, 2022. The increase was due to advance payments to a supplier
for software during the nine months ended September 30, 2022 compared with the
period from March 11, 2021 (Inception) to September 30, 2021.



Financing activities



Net cash provided by financing activities was $9,903,204 during the nine months
ended September 30, 2022 compared with $310,824 provided by financing activities
during the period from March 11, 2021 (Inception) to September 30, 2021. During
the nine months ended September 30, 2022, we received combined net proceeds from
the IPO and PIPE totaling $9,949,461 and made principal payments on our note
payable of $46,257. During the period from March 11, 2021 (Inception) to
September 30, 2021, we received $345,824 of proceeds from the sale of common
stock and paid $35,000 of deferred offering costs.



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JOBS Act



As an "emerging growth company" under the Jumpstart Our Business Startups Act of
2012, as amended, or the JOBS Act, we can take advantage of an extended
transition period for complying with new or revised accounting standards. This
allows an emerging growth company to delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. We
have irrevocably elected to "opt out" of this provision and, as a result, we
will comply with new or revised accounting standards when they are required to
be adopted by public companies that are not emerging growth companies.



Subject to certain conditions, as an emerging growth company, we rely on certain
of these exemptions, including without limitation:



  ? reduced disclosure about our executive compensation arrangements;




    ?   no advisory votes on executive compensation or golden parachute
        arrangements; and



? exemption from the auditor attestation requirement in the assessment of

        our internal control over financial reporting.




We may take advantage of these exemptions for up to five years or such earlier
time that we are no longer an emerging growth company. We would cease to be an
emerging growth company on the date that is the earliest of (i) the last day of
the fiscal year in which we have total annual gross revenue of $1.07 billion or
more; (ii) the last day of 2027; (iii) the date on which we have issued more
than $1.0 billion in nonconvertible debt during the previous three years; or
(iv) the date on which we are deemed to be a large accelerated filer under the
rules of the SEC. We may choose to take advantage of some but not all of these
exemptions. Accordingly, the information contained herein may be different from
the information you receive from other public companies in which you hold stock.



Smaller Reporting Company



As a "smaller reporting company," as defined in Rule 12b-2 of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, in addition to providing
reduced disclosure about our executive compensation arrangements and business
developments, among other reduced disclosure requirements available to smaller
reporting companies, we present only two years of audited financial statements
in addition to any required unaudited interim financial statements with
correspondingly reduced "Management's Discussion and Analysis of Financial
Condition and Results of Operations" disclosure. Accordingly, the information
contained herein may be different from the information you receive from other
public companies in which you hold stock.



Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
SEC.

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