MOBILE GLOBAL ESPORTS INC. 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. OverviewMobile Global Esports Inc. ("MOGO" or "Mogo ," or the "Company") was organized in March of 2021 to expand an esports business created by Sports Industry ofIndia ("SII"), in 2016. Through a series of contracts, the rights to the business were assigned toMOGO 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 inIndia , 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 byMOGO , is the only business inIndia to organize and sponsor an officially-sanctioned national championship for university esports. SII holds a 14.5% minority common share interest inMOGO , but has no controlling interest inMOGO . 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$177,000 for the six months endedJune 30, 2022 and$262,000 for the period fromMarch 11, 2021 (Inception) throughDecember 31, 2021 . As ofJune 30, 2022 , we had an accumulated deficit of approximately$440,000 . 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$5,875,000 of net proceeds from our initial public offering ("IPO") inJuly 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
DuringJuly 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$5,875,000 , with$500,000 of these funds currently held in an escrow account for our benefit.
Components of Statements of Operations
Revenue and Cost of Revenue
We have not generated any revenue or cost of revenue to date.
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Research and Development Expenses
Research and development expenses consist of the fair value of warrants issued to consultants that have provided certain advice to the Company on developing, establishing, operating, commercializing, marketing, promoting, and expanding the Company's esports business. We expense research and development costs as incurred.
General and Administrative Expenses
General and administrative expenses consist principally of event marketing and development fees, and other professional fees for 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 six months ended June 30, 2022 to our critical
accounting policies, significant judgments and estimates disclosed in our Form
S-1.
Results of Operations
Three and Six Months Ended
The following table summarizes the results of our operations for each of the three and sixmonth periods endedJune 30, 2022 and the period fromMarch 11, 2021 (Inception) toMarch 31, 2021 and toJune 30, 2021 , together with the changes in those items in dollars and as a percentage: Three Months Ended Six Months Ended June 30, $ % June 30, $ % 2022 2021 Change Change 2022 2021 Change Change Revenue $ - $ - $ - * $ - $ - $ - * Costs and expenses: Cost of revenue - - - * - - - *
Research and development 46,480 - 46,480 ** 92,960 - 92,960 ** General and administrative 39,303 150 39,153 ** 84,305 150 84,155 ** Total costs and expenses 85,783 150 85,633
** 177,265 150 177,115 ** Loss from operations (85,783 ) (150 ) (85,633 ) ** (177,265 ) (150 ) (177,115 ) ** Net loss$ (85,783 ) $ (150 ) $ (85,633 ) **$ (177,265 ) $ (150 ) $ (177,115 ) ** * Not meaningful
** Change is significantly more than 1,000%
Research and Development Expenses
Research and development expenses were$46,480 and$92,960 for the three and six months endedJune 30, 2022 compared with$0 for the three months endedJune 30, 2021 and the period fromMarch 11, 2021 (Inception) toJune 30, 2021 . The increase is due to the issuance of warrants to consultants that provide certain services to the Company. 11
General and Administrative Expenses
General and administrative expenses were$39,303 for the three months endedJune 30, 2022 , compared with$150 for the three months endedJune 30, 2021 . The increase of$39,153 was primarily due to the increase in event marketing and development fees, and other professional fees for legal, auditing and tax services. General and administrative expenses were$84,305 for the six months endedJune 30, 2022 , compared with$150 for the period fromMarch 11, 2021 (Inception) toJune 30, 2021 . The increase of$84,155 was primarily due to the increase in event marketing and development fees, and other professional fees for legal, auditing and tax services.
Liquidity and Capital Resources
As of
We have financed our operations through the issuance of common stock. InJuly 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$5,875,000 , with$500,000 of these funds currently held in an escrow account for our benefit. Funding Requirements
We believe the net proceeds of the IPO 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. Accordingly, our management will have broad discretion in the application of these proceeds. We intend to use the net proceeds from the IPO for operating expenses, marketing, event expenses, streaming, retention of additional staff inIndia , 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 this IPO. 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 for other purposes. Because of the numerous risks and uncertainties associated with establishing a new business inIndia , 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.
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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:
Six Months Ended
June 30,
2022 2021
Net cash provided (used) by:
Operating activities $ (116,119 ) $ (150 )
Investing activities - -
Financing activities (53,348 ) 115,705
Net increase (decrease) in cash and cash equivalents
Operating Activities Net cash used in operating activities increased$115,969 for the six months endedJune 30, 2022 . The increase was primarily due to an increase in both research and development expenses and general and administrative expenses during the six months endedJune 30, 2022 compared with the period fromMarch 11, 2021 (Inception) toJune 30, 2021 . Financing activities Net cash used by financing activities was$53,348 during the six months endedJune 30, 2022 compared with$115,705 provided by financing activities during the period fromMarch 11, 2021 (Inception) toJune 30, 2021 . During the period fromMarch 11, 2021 (Inception) toJune 30, 2021 , we received$6,100 of proceeds from the sale of common stock and$109,605 of advanced payments for the future issuance of common stock. Subsequent toJune 30, 2021 , we issued 3,653,500 shares of common stock for$109,605 of advanced payments received. During the six months endedJune 30, 2022 , we incurred deferred financing costs associated with the IPO of$53,348 . 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 theSEC . 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. 13Smaller 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 theSEC .
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