References to the "Company," "MPAC," "our," "us" or "we" refer to Model Performance Acquisition Corp. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited interim condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other U.S. Securities and Exchange Commission ("SEC") filings.

Overview

We are a blank check company incorporated in the British Virgin Islands as a business company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the private placement of the private placement units, the proceeds of the sale of our securities in connection with our initial business combination, our shares, debt or a combination of cash, stock and debt.

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination (as defined below) will be successful.

Business Combination Agreement

On August 6, 2021, MultiMetaVerse Inc., a Cayman Islands exempted company ("MMV"), MPAC, certain shareholders of MMV (each, a "Principal Shareholder" and collectively the "Principal Shareholders"), Model Performance Mini Corp., a British Virgin Islands business company ("Purchaser") and Model Performance Mini Sub Corp., a Cayman Islands exempted company and wholly-owned subsidiary of the Purchaser (the "Merger Sub"), entered into a Merger Agreement (the "Merger Agreement").

On January 6, 2022, each of the parties to the Merger Agreement and Avatar Group Holdings Limited, a British Virgin Islands business company controlled by certain Principal Shareholder ("Avatar"), entered into a First Amendment to Merger Agreement (the "First Amendment").

The First Amendment includes an amended covenant for MMV to procure from additional reputable investors equity financing in the aggregate amount of $10,000,000 to MPAC no later than 15 days prior to the closing date of the Business Combination (the "Closing Date").

The First Amendment also includes the following new covenants:

MMV agrees to make to MPAC, and MPAC agrees to borrow from MMV three tranches

of non-interest bearing loans in the aggregate principal amount of $2,750,000

(the "Company Loans"), all of which shall become repayable upon closing of the ? Business Combination, or if the Purchaser Parties (defined below) materially

breach the Merger Agreement or the First Amendment and such breach has not been

cured within fifteen (15) days after the Company's receipt of such notice

containing the details of breach;

MPAC shall use the proceeds of MMV Loans for, among other things, working ? capital and to fund amounts required to extend the period of time for MPAC to

consummate a Business Combination for up to two (2) times up to 18 months from

the closing of its initial public offering ("MPAC's Duration Period");




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prior to the expiration of the MPAC's Duration Period, the MPAC shall hold a

general meeting of shareholders to further extend the MPAC's Duration Period ? (the "Further Extension Period"), and MMV shall bear and prepay MPAC in the

form of additional loans to fund for any and all costs and expenses incurred

(including costs from an increased redemption amount or additional premium paid

or to be paid to the shareholders of MPAC);

in the event that the closing of the Business Combination fails to occur within

the MPAC's Duration Period (inclusive of applicable Further Extension Period) ? due to reasons not directly attributable to MPAC, Purchaser and Merger Sub

(collectively, the "Purchaser Parties"), Avatar shall pay MPAC a lump sum

payment of $3,250,000 (the "No-Deal Payment"); and

in the event that the closing of the Business Combination fails to occur on or

prior to August 25, 2022, within five (5) business days after MMV's receipt of ? relevant account details, MMV and Avatar shall (on a joint and several basis)

deposit $2,900,000 of the No-Deal Payment into an escrow account designated by

MPAC, the amount of which shall be released to MPAC, for satisfaction of the

obligation of Avatar under the First Amendment.

On September 29, 2022, each of the parties to the First Amendment entered into a Second Amendment to Merger Agreement (the "Second Amendment") pursuant to which the parties agreed to, among other things, the following:

? extend the Outside Closing Date (as defined in the Merger Agreement) from

September 30, 2022 to February 25, 2023;

in order to facilitate the extension of the date by which MPAC has to

consummate a Business Combination for up to two (2) times for an additional

three (3) months each time, from October 12, 2022 to April 12, 2023, MMV agreed ? to loan to MPAC an aggregate principal amount of $525,000 in two tranches, all

of which shall become repayable upon closing of the Business Combination, or if

the Purchaser Parties materially breach the Merger Agreement or its amendments

and such breach has not been cured within fifteen (15) days following receipt

of a notice of such breach; and

certain Principal Shareholders (the "Restricted Shareholders") agreed that (i)

an aggregate of 5,000,000 ordinary shares of their Closing Payment Shares

("Restricted Closing Payment Shares") will be non-transferable and subject to

forfeiture by the Reincorporation Surviving Corporation if the Release Event

does not occur within 12 months following the Closing, (ii) such Restricted

Closing Payment Shares shall vest and become transferable and non-forfeitable

upon the successful creation of a new gameplay coupled with a public

announcement regarding release of the new gameplay, whether through the ? introduction of a new mobile game or updates to an existing mobile game to

revamp its gameplay and commercial appeal (the "Release Event"), with the

determination of whether an event is deemed a Release Event to be determined by

a majority vote of the independent directors of the board of the

Reincorporation Surviving Corporation in their sole discretion; and (iii) until

the vesting of the Restricted Closing Payment Shares, such Restricted Closing

Payment Shares shall be held in escrow in accordance with certain Share

Restriction Agreements to be entered between the Purchaser and each of the

Restricted Shareholders prior to the closing of the Business Combination.

The foregoing descriptions of the Merger Agreement, the First Amendment and the Second Amendment are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement, the First Amendment and the Second Amendment, respectively. Copies of the Merger Agreement, the First Amendment and the Second Amendment are further described in our Current Report on Form 8-K filed with the SEC on September 30, 2022 as Exhibits 2.1, 2.2 and 2.3, respectively, and the terms of which are incorporated by reference herein.

On September 28, 2022, MPAC's shareholders voted in favor of the proposal to amend its memorandum and articles of association. In connection with the meeting, 3,508,994 Class A ordinary shares were tendered for redemption. On September 29, 2022, $36,343,194 was paid from the Trust Account to public shareholders for redemption of 3,508,994 Class A ordinary shares, and $224,101 was deposited into the trust account by MPAC, to extend the Combination Period from October 12, 2022 to January 12, 2023. Following such redemptions and the deposit, the amount of funds remaining in the trust account is approximately $23.4 million.

Results of Operations

We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through September 30, 2022 were organizational activities and those necessary to prepare for the Initial Public Offering. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. We expect that we will incur



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increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a Business Combination.

For the three months ended September 30, 2022, we had a net loss of $370,812 which consisted of formation and operating expenses $633,462, offset by interest earned on marketable securities held in Trust Account of $256,391, change in fair value of warrant liability of $6,259.

For the nine months ended September 30, 2022, we had a net loss of $970,865 which consisted of formation and operating expenses $1,350,364, offset by interest earned on marketable securities held in Trust Account of $336,532, change in fair value of warrant liability of $42,967.

For the three months ended September 30, 2021, we had a net loss of $195,224, which consists of formation and operation costs of $201,875, offset by the change in fair value of private warrants of $5,187 and trust interest income of $1,464.

For the period from January 8, 2021 (inception) to September 30, 2021, we had a net loss of $264,270, which consists of formation and operation costs of $332,852, offset by the change in fair value of private warrants of $66,450 and trust interest income of $2,132.

Liquidity and Capital Resources

On April 12, 2021, the Company consummated the IPO of 5,000,000 units (the "Units"). Each Unit consists of one Class A ordinary share ("Ordinary Share"), one-half of one redeemable warrant ("Warrant") with each whole warrant entitling its holder to purchase one Ordinary Share at a price of $11.50, and one right ("Right") to receive one-tenth of one Ordinary Share upon the consummation of an initial business combination. The Company granted the underwriters of the IPO (the "Underwriters") a 45-day option to purchase up to an additional 750,000 units at the IPO price to cover over-allotments, which was subsequently exercised on April 12, 2021 (the "Over-Allotment Option"). The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $50,000,000. On April 15, 2021, the Over-Allotment Option closed. The total aggregate issuance by the Company of the Over- Allotment Option Units at a price of $10.00 per unit resulted in total gross proceeds of $7,500,000. On April 15, 2021, simultaneously with the sale of the Over-Allotment Option Units, the Company consummated the private sale of an additional 22,500 private Units, generating gross proceeds of $225,000. The Private Units were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.

Following the Initial Public Offering, the sale of the Private Placement Warrants and the exercise of over-allotment option, a total of $58,075,000 was placed in the Trust Account. As of September 30, 2022, we had $442,450 of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available for working capital purposes. We incurred $4,120,737 in transaction costs, including $1,150,000 of underwriting fees, $2,012,500 of deferred underwriting fees and $496,269 of other offering costs and $461,968 of fair value of 57,500 representative's ordinary shares.

For the nine months ended September 30, 2022, cash and cash equivalents used in operating activities was $1,205,276. Net loss of $970,865 was affected by noncash charges related to interest earned on marketable securities held in Trust Account of $336,532, change in fair value of warrant liability of $42,967 and cash used in operating activities of $145,088.

For the period from January 8, 2021 (inception) to September 30, 2021, cash used in operating activities was $205,533. Net loss of $264,270 was affected by noncash charges related to formation costs paid by Sponsor in exchange for issuance of Class B ordinary shares of $3,725, interest earned on marketable securities held in Trust Account of $2,132, change in fair value of warrant liability of 66,450 and cash used in operating activities of $123,594.

For the nine months ended September 30, 2022, we had cash of $442,450 available for working capital needs.

Our liquidity needs have been satisfied to date through receipt of $25,001 from the sale of the insider shares, advances from our sponsor and an affiliate of our sponsor in an aggregate amount of $200,000, which was cancelled in connection with the Private Placement and not outstanding as of December 31, 2021, and, following the IPO, the remaining net proceeds from our IPO and Private Placements.

On January 10, 2022, March 21, 2022, June 21, 2022, June 29, 2022 and September 30, 2022, we received loans for an aggregate of $2,684,975, from MMV.



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We have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. If the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate its business prior to our Business Combination. Moreover, we may need to obtain additional financing or draw on the Working Capital Loans (as defined below) either to complete a Business Combination or because it becomes obligated to redeem a significant number of the public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete the Business Combination because it does not have sufficient funds available, we will be forced to cease operations and liquidate the Trust Account. In addition, following the Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

In addition, in connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board's Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," we have until April 12, 2023 (after three extensions and one potential extension for a quarter each since April 12, 2022, the initial expiration date) to consummate the proposed Business Combination. It is uncertain that we will be able to consummate the proposed Business Combination by this time. Management has determined that the mandatory liquidation, should a business combination not occur, and potential subsequent dissolution, raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after April 12, 2023. On August 6, 2021, we entered into a Merger Agreement, which provides for a business combination between us and MMV. We intend to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that we will be able to consummate any business combination by April 12, 2023.

These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2022. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non- financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an agreement to pay our Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support. We began incurring these fees on April 12, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.

The underwriters are entitled to a deferred fee of 3.5% of the gross proceeds of the Initial Public Offering, or $2,012,500. The deferred fee will be payable in cash to the underwriters solely in the event that we complete a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.

Pursuant to the Amendments, MMV will provide certain interest-free loans with an aggregate principal amount of $3,275,000 to us to fund any amount that may be required in order to extend the period of time available for us to consummate a business combination and for our working capital. Such loans will only become repayable upon the Closing of the Business Combination. As of September 30, 2022 we received $2,684,975 under such loan.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:



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Warrant Liability

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, "Derivatives and Hedging". Derivative instruments are recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Financial Accounting Standards Board ("FASB") ASC 470-20, Debt with Conversion and Other Options addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this guidance to allocate IPO proceeds from the Units between Class A ordinary shares and warrants, using the residual method by allocating IPO proceeds first to fair value of the warrants and then the Class A ordinary shares.

The Company accounts for the private placement warrants as warrant liabilities due to certain features contained in the warrant agreements that give rise to liability treatment. The public warrants are treated as equity as they do not meet the definition of a warrant liability.

Net Loss Per Share

We have two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. The 3,021,250 and 0 potential common shares for outstanding warrants to purchase our stock were excluded from diluted earnings per share for the three and nine months ended September 30, 2022, the three months ended September 30, 2021 and for the period from January 8, 2021 (inception) through September 30, 2021 respectively, because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods.

Recent Accounting Standards

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's financial statements.

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