MOBILE GLOBAL ESPORTS INC. You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing in this Annual Report on Form 10-K. This discussion and other parts of this Annual Report on Form 10-K 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 Annual Report on Form 10-K, 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, and elsewhere in this Annual Report on 10-K..
Objective
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations is intended to provide information necessary to understand
our audited consolidated financial statements for the year ended
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Overview of 2022
The SII esports business, which has now been transferred to and is operated by
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.
We are a pre-revenue, early development-stage company. Our 2022 financial results reflect our investment in building a professional management team and building our infrastructure for revenue-producing initiatives, our game platform and our commercial data capabilities.
Since our inception, we have incurred operating losses. Our comprehensive loss
was approximately
Components of Consolidated 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 employee compensation, event marketing and development fees, insurance expense, public listing fees, and other professional fees for consulting, legal, auditing and tax services.
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Comparison of the Year Ended
The following table summarizes the results of our operations:
2022 2021 % Change
Revenue $ - $ - $ - *
Costs and expenses:
Cost of revenue - - - *
General and administrative 1,286,362 262,360 1,024,002 **
Total costs and expenses 1,286,362 262,360 1,024,002 **
Loss from operations (1,286,362 ) (262,360 ) (1,024,002 ) **
Interest expense (1,322 ) - (1,322 ) **
Net loss $ (1,287,684 ) $ (262,360 ) $ (1,025,324 ) **
* Not meaningful
** Change is significantly more than 500%
General and Administrative Expenses
General and administrative expenses were
Liquidity and Capital Resources
As of
We have financed our operations through the issuance of common stock and common
stock with warrants. In
Issuance of Common Stock and Warrants in IPO
During
As a part of this transaction we issued warrants to the representative of the
underwriters to purchase a number of common shares equal to 10% of the total
number of common shares sold by the Company in the IPO. The representative's
warrants provide for the purchase of up to 172,500 shares of common stock at a
purchase price of
Issuance of Common Stock and Warrants in PIPE
During
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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 18 to 24 months.
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
Because of the numerous risks and uncertainties associated with establishing a
new business in
? 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 Operating Activities
Net cash used in operating activities for the year ended
Investing Activities
Net cash used in investing activities for the year ended
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Financing activities
Net cash provided by financing activities for the year ended
Contractual Obligations and Commitments
During
From time to time, we may be involved in various litigation matters, which arise in the ordinary course of business. There is currently no litigation that we believe will have a material impact on the financial position of the Company.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in conformity with accounting
principles generally accepted in
Property and Equipment
Property and equipment, net, is stated at cost. Depreciation is computed over the estimated useful lives of the assets, generally three to five years, using the straight-line method. Expenditures for maintenance and repairs are charged to operations; major expenditures for renewals and betterments are capitalized and depreciated over their useful lives. Leasehold improvements are amortized over the lesser of the asset life or the life of the lease.
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Leases
The Company leases office space in
Fixed lease payments on operating leases are recognized over the expected term of the lease on a straight-line basis. Variable lease expenses that are not considered fixed are expensed as incurred. Fixed and variable lease expense on operating leases is recognized within operating expenses within the accompanying consolidated statements of operations and comprehensive loss.
The interest rate implicit in the Company's lease contracts is typically not readily determinable and as such, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.
Long-Lived Assets
The Company reviews long-lived assets for realizability on an ongoing basis. Changes in depreciation and amortization, generally accelerated depreciation and variable amortization, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. The Company also reviews for impairment when conditions exist that indicate the carrying amount of the assets may not be fully recoverable. In those circumstances, the Company performs undiscounted operating cash flow analyses to determine if an impairment exists. When testing for asset impairment, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. Any impairment loss is calculated as the excess of the asset's carrying value over its estimated fair value. Fair value is estimated based on the discounted cash flows for the asset group over the remaining useful life or based on the expected cash proceeds for the asset less costs of disposal. Any impairment losses would be recorded in the consolidated statements of operations. To date, no such impairments have occurred.
JOBS Act
As an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012, as amended (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 revenues of
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Smaller Reporting Company As a "smaller reporting company," as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (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
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