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. 11
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. 12 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. 13 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;
? Other risks, including those described in the “Risk Factors” discussion.
See “Risk Factors” for additional risks associated with our substantial capital
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. 14 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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