MGAM 10-Q
Mobile Global Esports, Inc. (MGAM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal quarter ended
or
For the transition period from to
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MOBILE GLOBAL ESPORTS INC.
Table of Contents
i
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report may be forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Quarterly Report. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “would,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| ● | 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. |
You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results set forth under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes from the risk factors previously disclosed therein, except as set in the “Risk Factors” section of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. The forward-looking statements in this Quarterly Report are only predictions, and we may not actually achieve the plans, intentions or expectations included in our forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.
These forward-looking statements speak only as of the date of this Quarterly Report. While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
ii
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
MOBILE GLOBAL ESPORTS INC.
Condensed Balance Sheets
| June 30, | December 31, | |||||||||
| 2025 | 2024 | |||||||||
| Note | (unaudited) | (audited) | ||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash | $ | $ | ||||||||
| Prepaid expenses | ||||||||||
| Total current assets | ||||||||||
| Software in progress | ||||||||||
| Other long-term assets | ||||||||||
| Total assets | $ | $ | ||||||||
| Liabilities | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued expenses | 3 | $ | $ | |||||||
| Notes payable | 4 | - | ||||||||
| Total current liabilities | ||||||||||
| Commitments and contingencies | 7 | |||||||||
| Stockholders’ equity | 6 | |||||||||
| Preferred stock; $ | ||||||||||
| Common stock, $ | ||||||||||
| Additional paid-in capital | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||||
| Total stockholders’ equity - Mobile Global Esports Inc. | ||||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||||
| Total stockholders’ equity | ||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||
The accompanying footnotes are an integral part of these unaudited financial statements.
1
MOBILE GLOBAL ESPORTS INC.
Condensed Statements of Operations (Unaudited)
For the three and six months ended June 30, 2025 and 2024
| Six Months | Six Months | Three Months | Three Months | |||||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||||
| Note | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||
| Cost of revenue | ||||||||||||||||||
| Gross profit | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Research and development expenses | ||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||
| Total operating expenses | ||||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest income | ||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain on sale of property and equipment | ||||||||||||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | ||||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss - non-controlling interest | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss attributable to Mobile Global Esports Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average common shares outstanding, basic and diluted | ||||||||||||||||||
| Comprehensive loss: | ||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Unrealized gain (loss) on foreign currency translation | ( | ) | ( | ) | ||||||||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Comprehensive loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Comprehensive loss - Mobile Global Esports Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
The accompanying footnotes are an integral part of these unaudited financial statements.
2
MOBILE GLOBAL ESPORTS INC.
Condensed Statements of Stockholders’ Equity (Unaudited)
For the three and six months ended June 30, 2025 and 2024
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Comprehensive | Non-controlling | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Gain (Loss) | Interest | Equity | ||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||
| Other comprehensive gain | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2025 (unaudited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||
| Issuance of common stock with warrants | ||||||||||||||||||||||||||||
| Issuance of common stock with notes payable | ||||||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance, June 30, 2025 (unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Fair value of warrants issued for services | - | |||||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance, March 31, 2024 (unaudited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Fair value of warrants issued for services | - | |||||||||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||
| Other comprehensive loss | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance, June 30, 2024 (unaudited) | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited financial statements.
3
MOBILE GLOBAL ESPORTS INC.
Condensed Statements of Cash Flows (Unaudited)
For the six months ended June 30, 2025 and 2024
| Six months ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| unaudited | unaudited | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock issued for services | ||||||||
| Amortization of debt discount | ||||||||
| Depreciation | ||||||||
| Fair value of warrants issued for services | ||||||||
| Amortization of right of use assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Advances to suppliers for software | ( | ) | ||||||
| Payments for property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Issuance of common stock with warrants | ||||||||
| Issuance of notes payable | ||||||||
| Repayment of note payable | ( | ) | ||||||
| Net cash provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash | ( | ) | ( | ) | ||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash as of beginning of period | ||||||||
| Cash cash as of end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Right of use assets obtained on operating lease commencement | $ | $ | ||||||
| Warrants issued with notes payable | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited financial statements.
4
MOBILE GLOBAL ESPORTS INC.
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)
Note 1 – Organization and Basis of Presentation
Organization
Mobile Global Esports Inc. (“MOGO Inc”
or “MGAM”) was incorporated on
Basis of Presentation
The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Interim financial statements
The unaudited condensed financial statements are prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are necessary to fairly state the Company’s financial position, the results of its operations, and cash flows for the periods presented. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America were omitted pursuant to such rules and regulations. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025.
Liquidity and Going Concern
The Company’s operations are subject to certain risks and uncertainties, including, among others, the Company’s need for additional financing, the ability to attract mobile esports users and viewers to the Company’s offerings, the challenges of establishing a business in India, and reliance on key members of management.
The accompanying financial statements have been prepared on the basis that assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has a limited operating history, has incurred operating losses to date, and expects to incur operating losses for the foreseeable future. In addition, the Company has had significant management turnover in the past year and has significantly decreased its operational activity in India, which could negatively impact the Company’s ability to achieve its strategic direction. Furthermore, the Company may be unable to generate significant revenue within the next year or generate sufficient cash flows to continue its operations. The Company has a new Chief Executive Officer and is working with other consultants and its board of directors to operate the Company. Management believes the current team has the necessary experience to achieve its goals.
The Company has approximately $
5
MOBILE GLOBAL ESPORTS INC.
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates in the accompanying consolidated financial statements include the valuation allowance on deferred tax assets and the estimated value of warrants issued for services.
Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, amounts held in escrow and all highly-liquid debt instruments with original maturities of three months or less. At June 30, 2025 and December 31, 2024, the Company did not have any cash equivalents.
Software in progress
The Company capitalizes internal-use software based on the guidance in Accounting Standards Codification (“ASC”) 350-40, Intangibles-Goodwill and Other-Internal-Use Software. The Company expenses costs during the preliminary project stage and capitalizes costs incurred during the application development stage until the software is substantially complete and ready for its intended use. Once the internal-use software is ready for its intended use, costs associated with training and routine maintenance are expensed as incurred. Significant enhancements and ugrades to the software are capitalized provided it is probably that these expenditures will result in additional functionality.
6
MOBILE GLOBAL ESPORTS INC.
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and accounts payable, the carrying amounts approximate their fair values due to their short maturities.
ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
| ● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| ● | Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement. |
The Company analyzes all financial instruments with features of both liabilities and equity under Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815, Derivatives and Hedging. The Company has determined that the warrants issued to date are freestanding financial instruments that are properly classified as equity.
At June 30, 2025 and December 31, 2024, the Company did not identify any assets or liabilities required to be presented on the balance sheet at fair value.
Concentration of Credit Risk
Financial instruments, which potentially subject
the Company to concentrations of credit risk, consist of cash and restricted cash. The Company places its cash with high quality financial
institutions and at times may exceed the Federal Deposit Insurance Corporation $
7
MOBILE GLOBAL ESPORTS INC.
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)
Revenue
The Company records revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
| ● | Step 1: Identify the contract with the customer | |
| ● | Step 2: Identify the performance obligations in the contract | |
| ● | Step 3: Determine the transaction price | |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract | |
| ● | Step 5: Recognize revenue when the company satisfies a performance obligation |
In order to identify the performance obligations in a contract with a customer, the Company assesses the promised goods or services in the contract and identifies each distinct promised good or service.
If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified as distinct.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.
Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company evaluates any noncash consideration, consideration payable to the customer, potential returns and refunds, and whether consideration contains a significant financing element in determining the transaction price.
Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service to its customer.
During the six months ended June 30, 2025, the
Company received approximately $
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.
8
MOBILE GLOBAL ESPORTS INC.
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)
Basic and Diluted Earnings Per Share
Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
Segments
The Company has
Recent Accounting Pronouncements
During 2023, the FASB issued ASU No. 2023-09, Income Taxes. ASU No. 2023-09 amends income tax disclosures to provide information to better asses how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The new guidance requires the entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company has adopted the provisions of ASU No. 2023-09 and the adoption did not have a material impact on the Company.
During 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280). ASU No. 2023-07 was issued to improve the disclosures about a public entity’s reportable segments and requires more detailed information about a reportable segment’s expenses. The primary focus of ASU No. 2023-07 is enhanced disclosures about significant segment expenses. The guidance is applicable and effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company has adopted the provisions of ASU No. 2023-07 and the adoption did not have a material impact on the Company.
Note 3 – Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following as of:
| June 30, 2025 | December 31, 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued consulting and professional fees | ||||||||
| Other accrued expenses | ||||||||
| Total | $ | $ | ||||||
9
MOBILE GLOBAL ESPORTS INC.
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)
Note 4 – Notes Payable
During June 2025, the Company entered into several
note payable agreements totaling $
Note 5 – Related Party Transactions
During the three and six months ended June 30,
2025, the Company made payments of approximately $
During the three and six months ended June 30,
2025 and 2024, the Company incurred a total of and $
During the three and six months ended June 30,
2024, the Company paid a stockholder $
During May 2024, the Company repaid $
Note 6 – Stockholders’ Equity
Preferred Stock
The Company has authorized the issuance of
Common Stock
The Company has authorized the issuance of
During June 2025, the Company issued
Warrants
At June 30, 2025, the Company had the following warrants outstanding:
| Outstanding | Ex Price | Exercisable | Ex Price | |||||||||||||
| 2021 Consultant Warrants | $ | $ | ||||||||||||||
| IPO Warrants | $ | $ | ||||||||||||||
| PIPE Warrants | $ | $ | ||||||||||||||
| Placement Agent Warrants | $ | $ | ||||||||||||||
| 2025 Warrants | $ | $ | ||||||||||||||
| 2023 Consultant Warrants | $ | $ | ||||||||||||||
| Total Warrants | ||||||||||||||||
10
MOBILE GLOBAL ESPORTS INC.
NOTES TO FINANCIAL STATEMENTS
For the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)
Note 7 – Commitments and Contingencies
Legal
From time to time, the Company may be involved in various litigation matters, which arise in the ordinary course of business. There is currently no litigation that management believes will have a material impact on the financial position of the Company.
Note 8 – Selling, General and Administrative Expense
Selling, general and administrative costs are expensed as incurred and primarily include consultant costs in the U.S. and India, public filing fees, travel expenses, and professional fees.
Note 9 – Net Loss Per Share
Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the periods. Fully diluted net loss per common share is computed using the weighted-average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of warrants that are computed using the treasury stock method.
At June 30, 2025 and December 31, 2024, there
were
Note 10 – Subsequent Events
During July 2025 and August 2025, the Company
issued
During August 2025, the Company issued convertible
promissory notes (“Notes”) in the principal amount of $
Management has evaluated events that occurred subsequent to the end of the reporting period and there are no othe subsequent events to report.
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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 Inc”) was incorporated on March 11, 2021 under the laws of the State of Delaware. The Company was originally named Elite Esports, Inc. but changed its name to Mobile Global Esports Inc. on April 21, 2021. During July 2022, MOGO Esports Private Limited (“MOGO Pvt Ltd”) was established and incorporated in India. During June 2025, MOGO Pvt LTD was determined to have no value and was removed from MOGO Inc.’s records. Also, during June 2025, MGAM announced the beta launch of its flagship product, Dominus Sports, integrated with PUHZL, MGAM’s proprietary artificial intelligence platform. Dominus Baseball is the first product that has been developed by the MGAM. Dominus introduces true-to-life simulation gameplay by turning live sports data into full 9-inning box scores using MGAM’s proprietary algorithms. The platform supports collaborative, role-based team ownership, enabling groups of users to manage teams as owners, scouts, coordinators, and general managers in a dynamic, strategic environment. PUHZL uses a combination of deterministic modeling and predictive modeling to drive in-app conversions, delivering personalized suggestions, adaptive chat experiences, and intelligent alerts that evolve with each user’s behavior.
Components of Statements of Operations
Revenue and Cost of Revenue
We have not generated any significant revenue or cost of revenue to date.
Selling, General and Administrative Expenses
General and administrative expenses consist principally of consultant costs in the U.S. and India, public filing fees, travel expenses, and professional fees.
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 2024 Form 10K, and that disclosure should be read in conjunction with the Quarterly Report on Form 10-Q. There have been no material changes during the three and six months ended June 30, 2025 to our critical accounting policies, significant judgments and estimates disclosed in our Form 10K.
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Results of Operations
Three and Six months Ended June 30, 2025 compared with the Three and Six months Ended June 30, 2024
The following table summarizes the results of our operations for the three and six months ended June 30, 2025 and 2024, together with the changes in those items in dollars and as a percentage:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| June 30, | $ | % | June 30, | $ | % | |||||||||||||||||||||||||||
| 2025 | 2024 | Change | Change | 2025 | 2024 | Change | Change | |||||||||||||||||||||||||
| Revenue | $ | — | $ | — | $ | — | * | $ | 1,564 | $ | — | $ | 1,564 | * | ||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||||||||
| Cost of revenue | — | — | — | * | — | — | — | * | ||||||||||||||||||||||||
| General and administrative | 447,378 | 496,585 | (49,207 | ) | (10 | )% | 845,525 | 1,114,199 | (268,674 | ) | (24 | )% | ||||||||||||||||||||
| Total costs and expenses | 447,378 | 496,585 | (49,207 | ) | (10 | )% | 845,525 | 1,114,199 | (268,674 | ) | (24 | )% | ||||||||||||||||||||
| Loss from operations | (447,378 | ) | (496,585 | ) | 49,207 | 10 | % | (843,961 | ) | (1,114,199 | ) | 270,238 | 24 | % | ||||||||||||||||||
| Other income/(expense), net | (1,820 | ) | (240 | ) | (1,580 | ) | ** | 11,067 | (1,253 | ) | 12,320 | ** | ||||||||||||||||||||
| Net loss | $ | (449,698 | ) | $ | (496,825 | ) | $ | 47,627 | 10 | % | $ | (832,894 | ) | $ | (1,115,452 | ) | $ | 282,558 | 25 | % | ||||||||||||
| * | Not meaningful |
| ** | Significantly more than 500% |
General and Administrative Expenses
General and administrative expenses were approximately $447,000 for the three months ended June 30, 2025, compared with $497,000 for the three months ended June 30, 2024. The decrease in general and administrative expenses was primarily driven by an increase of approximately $92,000 in consulting expense offset by decreases of $40,000 in legal and accounting fees and $115,000 in expenses incurred by MOGO Pvt Ltd as the Company shut down its office in India.
General and administrative expenses were approximately $845,000 for the six months ended June 30, 2025, compared with $1,114,000 for the six months ended June 30, 2024. The decrease in general and administrative expenses was primarily driven by an increase of approximately $234,000 in consulting expense offset by decreases of $179,000 in legal and accounting fees, $94,000 in board fees and US payroll and $224,000 in expenses incurred by MOGO Pvt Ltd as the Company shut down its office in India.
Liquidity and Capital Resources
As of June 30, 2025 and December 31, 2024, we had cash of approximately $595,000 and $929,000, 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. 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 we may need to raise additional funding to meet our cash, operational and liquidity requirements for at least 12 months after the date of this quarterly report.
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 the United States and India, working capital and general corporate purposes, including perhaps acquisitions of game licenses, technology platform agreements, data development 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.
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:
| Six months Ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | (512,620 | ) | $ | (1,034,531 | ) | ||
| Investing activities | (40,000 | ) | (40,574 | ) | ||||
| Financing activities | 220,000 | (65,040 | ) | |||||
| Effect of exchange rate changes on cash | (523 | ) | (1,070 | ) | ||||
| Net decrease in cash | $ | (333,143 | ) | $ | (1,141,215 | ) | ||
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Operating Activities
Net cash used in operating activities decreased by approximately $522,000 for the six months ended June 30, 2025 compared with the six months ended June 30, 2024. The decrease was primarily due to a decrease in net loss of approximately $283,000 and an increase in non-cash expenses for stock and warrants issued for services of $96,000 offset by a change in operating assets and liabilities of $143,000.
Investing Activities
Net cash used in investing activities was unchanged for the six months ended June 30, 2025 compared with the six months ended June 30, 2024.
Financing activities
Net cash used in financing activities increased by approximately $285,000 for the six months ended June 30, 2025 compared with the six months ended June 30, 2024. The change was due to an increase if financing raised from the issuance of notes payable and common stock with warrants totaling $220,000 offset by a decrease in payments on the note payable of $65,000 for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
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. |
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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.
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of June 30, 2025, management has not completed an effective assessment of the Company’s internal controls over financial reporting based on the 2013 Committee of Sponsoring Organizations (COSO) framework. Management has concluded that, during the period covered by this quarterly report, our internal controls and procedures were not effective to detect the inappropriate application of U.S. GAAP. Management identified the following material weaknesses set forth below in our internal control over financial reporting.
1. We lack the necessary corporate accounting resources to maintain adequate segregation of duties.
2. We did not perform an effective risk assessment or monitor internal controls over financial reporting or our cyber security environment.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II.
Item 1. Legal Proceedings.
We are not currently subject to any legal proceedings or claims, however, we may become subject to legal proceedings and claims arising in connection with the normal course of our business.
Item 1A. Risk Factors.
RISK FACTORS
You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results set forth under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes from the risk factors previously disclosed therein, except as set forth below;
We will require additional financing in order to implement and execute our business plan, and we cannot be certain that such additional financing will be available on reasonable terms when required, or at all.
As of June 30, 2025, we had a cash balance of approximately $595,000. We believe we may need to raise additional funding to meet our cash, operational and liquidity requirements to continue operating for at least 12 months after the date of this quarterly report.
We have obtained some additional financing during the three months ended June 30, 2025 and subsequently. However, we continue to seek additional financing and there can be no assurance that such additional capital will be available on a timely basis, or on terms acceptable to the Company. If adequate funds are not available or are not available on acceptable terms when needed, the Company may not be able to fund its business or its expansion, take advantage of strategic acquisitions or investment opportunities or respond to competitive pressures. Such inability to obtain additional financing when needed could have a material adverse effect on the Company’s business, results of operations, cash flow, financial condition and prospects. Any future equity financing may involve substantial dilution to existing shareholders.
If we raise additional funds by issuing equity or convertible debt securities, we will reduce the percentage ownership of our then-existing stockholders, and the holders of those newly-issued equity or convertible debt securities may have rights, preferences, or privileges senior to those possessed by our then-existing stockholders and/or note holders. Additionally, future sales of a substantial number of shares of our Common Stock or other equity-related securities could depress the market price of our Common Stock in the public market, and could impair our current or future ability to raise capital through the sale of additional equity or equity-linked securities or the sale of debt. We cannot predict the effect that future sales of our Common Stock or other equity-related securities would have on the market price of our Common Stock.
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Item 6. Exhibits
The exhibits listed on the Exhibit Index hereto are filed or furnished (as stated therein) as part of this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
| Exhibit No. | Document | |
| 31.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. | |
| 31.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. | |
| 32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. | |
| 32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act. | |
| 101* | The following materials from Mobile Global Esports Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Extensible Business Reporting Language (iXBRL): (i) Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024, (ii) Statements of Operations (unaudited) for the three and six months ended June 30, 2025 and 2024, (iii) Statements of Cash Flows (unaudited) for the three and six months ended June 30, 2025 and 2024 and (iv) Notes to Financial Statements (unaudited). | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MOBILE GLOBAL ESPORTS INC. | ||
| DATE: August 14, 2025 | By: | /s/ Brett Rosin |
| Brett Rosin | ||
| Director and Chief Executive Officer | ||
| MOBILE GLOBAL ESPORTS INC. | ||
| DATE: August 14, 2025 | By: | /s/ Mark J. Keeley |
| Mark J. Keeley | ||
| Chief Financial Officer Consultant | ||
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