Business context and reporting period
This is The NFT Gaming Company, Inc.’s Form 10-K for the fiscal year ended December 31, 2022—not a standalone fourth-quarter report. The filing describes its planned gaming and NFT platform, “Gaxos.” The filing identifies the registrant and Nasdaq ticker as The NFT Gaming Company, Inc. and NFTG, respectively; it does not identify the registrant as GAXOS.AI Inc.
The company was an early-stage developer of a digital gaming platform and games incorporating NFTs. At year-end, it had not launched the platform or generated operating revenue. It planned to earn revenue from NFT sales, commissions, royalties, transaction fees, advertising, and partnerships.
Financial and operating results
| Metric | 2022 | Prior comparable period |
|---|---|---|
| Revenue | $0 | $0 (inception October 27–December 31, 2021) |
| Research and development | $824,523 | $6,810 |
| General and administrative | $599,573 | $5,445 |
| Operating loss | $1,424,096 | $12,255 |
| Net loss | $1,421,172; $0.14 per share | $12,255; reported as $0.00 per share |
| Cash used in operating activities | $1,260,425 | $3,519 |
| Cash and cash equivalents at period end | $679,781 | $2,078,141 |
At December 31, 2022, total assets were $941,427, current liabilities were $255,694, working capital was $627,086, and stockholders’ equity was $685,733. The company reported no debt. It had an accumulated deficit of $1,433,427. The balance sheet included a $58,647 net intangible asset related to a Columbia University license; no game or platform development costs had been capitalized.
Material changes versus the prior comparable period
Operating expenses rose substantially as development and public-company preparation progressed: R&D increased to $824,523, primarily for labor, outside development, and software licenses; G&A increased to $599,573, including compensation and professional fees. Cash fell by $1,398,360 during 2022, principally reflecting operating outflows, deferred offering costs, and the Columbia license investment. The comparison period covers only the company’s initial two months of operations, so it is not a full-year comparison.
After year-end, the company completed its February 17, 2023 IPO, selling 1,686,747 shares at $4.15 each and receiving approximately $5.9 million in net proceeds. Management stated that the IPO proceeds and available working capital were expected to fund operations for at least 12 months from the report’s issuance date. The IPO proceeds were not included in December 31, 2022 cash.
Outlook, commentary, and key risks
- Management expected continued operating losses and said the company might never become profitable. The filing cites substantial doubt about the company’s ability to continue as a going concern due to uncertainty over future commercial revenue. Management nevertheless believed post-IPO resources would meet near-term needs.
- Planned 2023 milestones included beta testing in Q2, platform launch in Q3, and onboarding third-party games in Q4. The company estimated initial game and platform development and launch costs at approximately $1.5 million. These are plans and estimates, not achieved results.
- The company said it had rights related to 12 games and active development on nine; other sections describe plans for 15 games. Investors should verify the scope, status, and cost assumptions for the game slate.
- Key risks include execution and user adoption, continued need for capital and potential shareholder dilution, intense competition, cybersecurity and third-party service dependence, and uncertainty over whether NFTs or crypto transactions may be regulated as securities or otherwise subject to financial, privacy, or consumer-protection rules.
- The company planned to use Polygon for NFTs and anticipated accepting Bitcoin and Ethereum through third-party providers, converting receipts to cash. It had not yet arranged custody for crypto assets. It reported holding no digital assets at year-end.
- The August 2022 Columbia University license carries a $25,000 license fee, royalties generally of 2.5% or 5% of applicable net revenue, minimum annual royalties beginning with the first commercial launch, revenue-based milestone payments, and potential transaction-related payments.
- The independent auditor gave an unqualified opinion on the financial statements and reported no critical audit matters. Management stated disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Confirm the issuer identity: this filing is for The NFT Gaming Company, Inc. (NFTG), and does not establish that it is a filing by GAXOS.AI Inc.
- Check the latest cash, cash burn, and funding needs against the December 2022 figures and post-year-end IPO proceeds; the filing’s runway statement is management’s estimate.
- Track whether the planned platform, beta, and game launches occurred, and reconcile the stated 12-game portfolio, nine active developments, and 15-game plan.
- Review the Columbia license’s royalty, minimum-payment, milestone, and transaction-payment obligations as commercialization or financing progresses.
- Assess dilution, including the IPO shares, equity incentive plan, and post-year-end option grants, and review subsequent share-count disclosures.
- Monitor regulatory developments and the company’s actual payment-processing, crypto custody, compliance, and security arrangements before relying on its proposed NFT business model.