Business context and reporting period
The filing is The NFT Gaming Company, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2023. The company describes its gaming platform as “Gaxos”; the filing identifies its Nasdaq ticker as NFTG. This differs from the request metadata, which names GAXOS.AI Inc., so verify the issuer and security identity before relying on the summary.
The company is developing games and a platform combining conventional gaming with optional blockchain-based NFTs. It reported having launched Space Striker AI and Brawl Bots, but had not begun generating revenue.
Financial performance and position
| Metric | Q3 2023 / September 30, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 | $0 in Q3 2022 and first nine months of 2022 |
| Net loss | $857,059; $0.07 per share | $326,198 in Q3 2022; $3,147,134 for nine months 2023 versus $1,098,130 for nine months 2022 |
| Operating expenses | $873,616 in Q3 | $326,552 in Q3 2022; $3,184,549 for nine months 2023 versus $1,099,372 in 2022 |
| Cash and short-term investments | $764,977 cash; $3,570,888 short-term investments | $679,781 cash and no short-term investments at December 31, 2022 |
| Working capital | $4,214,083 | — |
| Total liabilities | $201,501, comprising accounts payable and accrued expenses | $255,694 at December 31, 2022 |
For the first nine months, operating cash outflow was $2,307,697, investing cash outflow was $3,515,867 (primarily purchases of U.S. Treasury bills), and financing provided $5,908,760, largely from the February 2023 IPO. Cash ended the period at $764,977. The filing reports no interest-bearing debt. With no revenue, profit or operating margin is not meaningful; the company remained loss-making.
Material changes versus prior periods
- Q3 net loss rose 163% year over year, and nine-month net loss rose 187%. Nine-month operating expenses increased by $2.09 million.
- General and administrative expense increased to $2.50 million for nine months from $490,607. The company attributes much of the increase to stock-based compensation, hiring, professional and investor-relations fees, and the post-IPO ramp-up. Nine-month stock-based compensation was $914,426.
- Research and development expense increased 3.6% for the nine-month period to $630,574; management expects it to increase as game development accelerates.
- The company raised $7.0 million gross in its IPO and received $5,958,470 net of offering expenses. It also bought back and cancelled 105,931 shares for $49,710 through September 30.
- The company terminated its Columbia University software and patent license, deeming it not commercially viable, and recorded a $52,363 impairment loss. Management said termination would not affect future revenue.
- Short-term investments produced $79,646 in unrealized gains for the nine months, recorded in other comprehensive income, and $37,415 of interest income.
Outlook, risks and unusual items
Management said it expects operating losses to continue for the foreseeable future and does not anticipate revenue in the near term. It believes cash and liquid investments are sufficient for at least 12 months from the filing date, while also stating that longer-term execution will require significant capital and that additional financing may not be available on favorable terms or at all.
Nasdaq notified the company on July 10, 2023 that its share price had been below the $1.00 minimum bid for 30 consecutive business days. The initial cure period ran through January 6, 2024; failure to regain compliance could lead to a further grace period or delisting, subject to applicable conditions. The filing warns that delisting could impair share liquidity, price and access to financing.
Other disclosed risks include the company’s ability to attract users and advertisers, compete, develop and monetize its products, obtain funding, and retain qualified personnel. Approximately $437,000 of cash exceeded FDIC insurance limits at September 30. The company reported no material pending legal proceedings, no off-balance-sheet arrangements, and no material changes in risk factors beyond the Nasdaq bid-price issue. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
Investor verification priorities
- Confirm the issuer and ticker: this filing is for The NFT Gaming Company, Inc. (identified in the filing as NFTG), while the request metadata says GAXOS.AI Inc.
- Check subsequent cash balances, operating burn and actual runway against management’s 12-month liquidity assessment.
- Verify subsequent Nasdaq bid-price compliance and listing status.
- Track whether the launched games attract users and begin producing revenue; the filing reports no revenue for either comparative period.
- Assess potential dilution from 1,686,747 placement-agent warrants exercisable at $4.565 and 460,000 stock options, and compare outstanding shares at September 30 (11,998,670) with the 12,072,553 reported as issued and outstanding on November 14, 2023.
- Review the use of IPO proceeds, ongoing repurchases, and future financing needs, as well as the commercial impact of terminating the Columbia license.